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LESS UNCERTAINTY FOR INDUSTRY: Some oil and gas industry groups hope that leasing provisions in Democrats’ reconciliation bill will force the Interior Department’s hand to begin holding lease sales more regularly.

Packed into the green-energy- and climate-change-focused Inflation Reduction Act is language requiring Interior to reinstate leases from Lease Sale 257 and bring back the three other offshore oil and gas lease sales it canceled in May.

It also includes new contingencies linking the issuance of offshore wind leases to the sale of oil and gas leases, and for onshore, the bill would also link rights-of-way for wind and solar on federal lands to the sale of oil and gas leases.

Why it matters: These are hearty concessions for the Democrats, a number of whom introduced legislation this Congress to nix new leasing on federal lands, and for President Joe Biden, who promised on the campaign trail to restrict new leasing and drilling and ordered a new leasing pause shortly after taking office.

The Biden administration, under significant pressure from environmental groups intending to hold Biden to those campaign promises, has been slow to auction off federal acreage. At the same time, though, it has stopped short of ruling out sales, as Republicans and a handful of Democrats — including Sen. Joe Manchin — have demanded that the administration carry on with lease sales to enable more domestic energy production in response to high prices globally.

Industry groups and Republican-led states have litigated against the administration ever since over how it’s carried out its leasing responsibilities, including suits challenging Biden’s pause on new leasing and Interior’s delayed five-year program.

For Erik Milito, president of the National Ocean Industries Association, the reconciliation bill’s leasing language should help redirect a wayward ship and would give his oil and gas members more certainty for expanding production.

“It was huge for NOIA to be able to secure the reinstatement of Lease Sale 257 and getting mandatory lease sales moving forward,” Milito told Jeremy, asserting that the language in the bill is “not discretionary.”

Milito said he expects environmental groups to continue to challenge any reinstatement of the 257, which Interior carried out in November but which a federal judge later threw out on grounds that the agency failed its environmental review obligations, and other provisions requiring sales. But, he said, if the provision is signed into law as is, it will mean that “Congress has spoken.”

“I would hope that this would drive Interior to move forward with [Outer Continental Shelf] oil and gas leasing in a way that really makes any further litigation irrelevant,” he said.

More bitter than sweet: Industry groups, including the American Petroleum Institute and American Exploration and Production Council, have welcomed the leasing provisions but resolved to oppose the bill (NOIA, on the other hand, which represents offshore wind developers and shipping companies in addition to oil and gas firms, has endorsed it).

The reason: The leasing provisions would be accompanied by higher minimum royalties for both onshore and offshore leasing, increase minimum per-acre bid thresholds for onshore lease sales, and raise rental rates.

Anne Bradbury, CEO of AXPC, which represents onshore developers exclusively, said those and other provisions like the methane fee outweigh the positives of new leasing requirements.

Bradbury name-dropped the Mineral Leasing Act, which governs the onshore oil and gas leasing program and provides that Iease sales be held “at least quarterly” where eligible lands are available (How much discretion Interior wields to comply with that timeline is the subject of active litigation).

“So, we appreciate it, but we also feel like it's current law that they need to [hold lease sales],” Bradbury told Jeremy.

Beyond that, obtaining leases is the “first step” for onshore developers, who then have to wade through litigation and acquire permits, she said.

“You’re not resolving any of the issues that make it difficult to produce on federal lands and in some ways, you're increasing the costs even more,” Bradbury said of the Democrats’ bill.

The permitting reform that’s been put on the table to succeed the reconciliation legislation is still outstanding, and some Republicans have drawn clear lines in the sand that they won’t accept the terms of the permitting reform as they stand.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

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SIEMENS TO WITHDRAW FROM RUSSIA BY SEPTEMBER: Siemens Energy CEO Christian Bunch said yesterday that the company plans to withdraw from Russia by the end of September, following through on its pledge to halt all new business in Russia following its invasion of Ukraine.

The time frame for its exit comes just weeks after Russian state-owned gas giant Gazprom abruptly cut gas flow to the EU, citing maintenance needed on one of the Siemens-manufactured turbines on its Nord Stream 1 pipeline.

But yesterday, Bunch noted that the turbine in question was a spare—meaning that any repairs would not have forced Russia to drastically scale back gas deliveries.

Speaking to reporters yesterday, Bunch said Siemens has begun restructuring operations in Russia, including selling or liquidating certain small businesses. The company is expected to take a $204 million hit as a result, Bunch said.

"Of course implementing this is not trivial in the current environment," Bunch said.

Siemens also communicated to Russian that it is prepared to continue maintenance of its Nord Stream 1 turbines after its exit, if Gazprom so chooses.

VIRGINIA REGULATORS OKAY LARGEST U.S. WIND FARM: Virginia state regulators have approved Dominion Energy’s request to build a 2.6-gigawatt offshore wind farm off the coast of Virginia Beach, advancing plans for what will soon be the biggest offshore wind farm in the country.

The Coastal Virginia Offshore Wind Project is a $9.8 billion venture, Dominion Energy said Friday, and will include a total of 176 wind turbines located roughly 30 miles off the coast.

Construction is slated for completion in 2026, at which point company officials said it will be capable of generating enough electricity to power up to 660,000 homes.

While Dominion acknowledged that utility costs will rise slightly for customers, who will see their bills increase by a monthly average of $4.72 over the next 35 years, they also stressed that the benefits will far outweigh the costs.

“The project is expected to save Virginia customers more than $3 billion during its first 10 years in operation,” the company said in a statement. “However, if these ongoing commodity market pressure trends continue, those savings could total up to nearly $6 billion – almost double the savings.”

‘DRY LIGHTNING’ TO BLAME FOR INTENSE CALIFORNIA WILDFIRES – NEW STUDY: “Dry lightning,” or lightning that that occurs with less than 2.5 mm of rainfall, is a major cause of some of the largest and most destructive wildfires in California state history, according to new research published in the journal Environmental Research: Climate.

Researchers utilized lightning counts, precipitation records, and atmospheric data from 1987-2020 and found that 48% of lightning that struck the ground during that period could be considered “dry lightning”—or lightning occurring with little or no rain.

These dry lightning events often result in destructive fires, “due to the intersection of dense, dry vegetation and a large population living adjacent to fire-prone lands,” they said.

“Unlike human-caused fires that originate in a single location, lightning outbreaks can strike multiple locations and start numerous simultaneous wildfires,” the study’s lead author, Dmitri Kalashnikov, said in a statement.

In fact, dry lightning storms have produced some of California’s largest and longest-lasting wildfires in the last 40 years. Activity is more concentrated at higher elevations in July and August, while lower elevations were struck more frequently in September and October, according to the study.

“In some locations, including most of the San Francisco Bay Area, North Coast, and portions of Southern Sierra, fully 60-80% of May-Oct cloud-to-ground lightning strikes occur as dry lightning!” co-author Daniel Swain said on Twitter. “Major implications for wildfire risk.”

“We hope this work will contribute to understanding & predicting dry lightning events in CA given their large implications for wildfire risk, since lightning ignitions often occur in large volume and spread widely across remote areas,” he added.

GERMANY’S COAL REVIVAL CONTINUES: German coal importers are expecting a flurry of new shipments beginning next month as the country scrambles to secure alternatives to Russian gas.

Alexander Bethe, the chairman of German coal importers' group Verein der Kohlenimporteure (VDKi), told Reuters that the group expects “significant volumes increases in the monthly import figures from September onwards.”

It is unclear who will be supplying the coal, though Australia, South Africa, Indonesia, and Colombia were all cited as potential suppliers by German industry officials earlier this year .

Coal imports could rise in September by as much as 50% compared to May, Bethe said, bringing the county’s annual imports of steam coal up to 32 million tons or more—up from 27 million tons the previous year.

Still, coal importers acknowledged weather and logistical concerns ahead, including low water conditions in Germany’s rivers and canals.

The levels have hampered shipments in recent weeks and forced barges to sail with reduced loads—and officials say they are hopeful that the low water conditions on rivers and canals might ease in mid-to-late August to free up more shipping space.

SPEAKING OF LOW WATER LEVELS… Persistently low rainfall has caused water levels at the Rhine river to fall quickly in recent weeks, potentially imperiling shipments as officials measured a depth of just 49 centimeters at a key gauge tower this weekend.

The low levels have forced the river to close to ship traffic for weeks, cutting off a main source of transport for coal components, chemicals, and other commodities to factories in Western Europe.

Instead, many have been forced to rely on freight transport—a costly, less efficient form of shipping.

“If [the river] stays dry then we are going to have a big problem,” Marc Daniel Heintz, the head of the secretariat at the International Commission for the Protection of the Rhine (ICPR), told Politico EU.

The Rundown

Financial Times Carmakers face fierce battle for lithium until 2030, warns top producer

New York Times Electric cars too costly for many, even with aid in climate bill

Associated Press Learning from failures: How Biden scored win on climate plan

ProPublica A uranium ghost town in the making

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FRIDAY | AUGUST 12

House lawmakers will reconvene in Washington to take up the Inflation Reduction Act, after Senate lawmakers voted to approve the bill late Sunday. House Majority Leader Steny Hoyer (D-Md.) said in a floor update that lawmakers should be prepared to vote as early as Friday on the bill. Time TBA.