AAPL Governmental Affairs Weekly Report - 5/26/20

  • 1.  AAPL Governmental Affairs Weekly Report - 5/26/20

    Posted 05-26-2020 17:43
      |   view attached
    Following please find highlights from the AAPL Governmental Affairs Weekly Report for the week of May 26, 2020. The full report is attached to this post.

    The next report will be published on June 8. Until then, 
    continue to keep an eye on the Landnews/AAPL Connect discussion forums and Landnews Digest emails for breaking governmental affairs information.

    FEDERAL - REGULATORY: BLM Onshore Suspension of Operations and Royalty Reductions Guidance. The Bureau of Land Management (BLM) has released guidance for oil and gas companies seeking royalty reductions or suspension of operations related to COVID-19 impacts. The announcements include Steps for Lessees to Apply for Oil and Gas Suspensions under “force majeure” due to COVID-19 (Read more); and Steps for Operator to Apply for Temporary Oil and Natural Royalty Rate Reduction (RRR) due to COVID-19 (Read more). The BLM guidance comes on the heels of outreach by federal legislators seeking this relief for the oil and gas industry. Read more.

    STATE - JUDICIAL: Permitting; State Regulations – California. In a blow to environmental activists, on April 8, the California Court of Appeal, Fifth Appellate District, on appeal from the Superior Court of Kern County, affirmed a lower court decision upholding well permits. In the case, Association of Irritated Residents v. California Dept. of Conservation, Division of Oil, Gas, and Geothermal Resources (Case No. F078460), the plaintiffs challenged the issuance of 213 permits to drill new oil wells within the South Belridge oil field by the Department of Conservation, Division of Oil, Gas, and Geothermal Resources (DOGGR), now known as the Geologic Energy Management Division. According to the complaint, DOGGR failed to comply with the California Environmental Quality Act (CEQA) when it issued each of the individual permits because, allegedly, no exemption was available and DOGGR failed in each instance to conduct any environmental review. The court disagreed, holding, “Under the narrow facts of this case, including DOGGR’s adoption of specific field rules applicable to drilling wells in the South Belridge oil field, we hold that DOGGR’s approvals to drill the new wells in question were ministerial in nature. As will be seen, the field rules, understood in light of foundational regulatory provisions and supplemented by a technical manual referenced in the field rules themselves, constituted fixed objective standards that delineated the technical specifications for drilling new wells at that particular oil field. Thus, DOGGR’s role in approving the subject new wells—wells that DOGGR acknowledged were ‘routine’— was simply to confirm whether the proposals conformed to those fixed objective standards. As such, the unique scenario that was presented here fit the CEQA definition of what constitutes ministerial decision-making. Accordingly, the judgment of the trial court is affirmed.” Read more.

    INDUSTRY NEWS: Industry experts are bullish on oil and gas. In a recent Forbes article, Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston's Bauer College of Business, says he “sees an industry that’s poised to roar back to life as soon as demand returns and inventories clear. This is not a speculative bust like the 1980s or 2015-16, with the price of oil falling from $110 per barrel,” according to Gilmer, who expects prices to return to near $60 or $65 per barrel by 2022. “It is a severe, but relatively short-lived, virus-driven event.” Echoing Gilmer’s predictions, analysts at some large financial institutions and banks agree. Goldman Sachs expects a "V-shaped" recovery in demand for oil. Read more.

    Russell Cohen
    AAPL Governmental Affairs