Shutdown Risks Delays to US Energy Initiatives

The partial government shutdown is increasing the chances of delays in U.S. energy initiatives from the release of President Donald Trump's proposed offshore drilling plan to allowing higher levels of ethanol in gasoline during summer months, energy industry groups said on Friday.

The U.S. Department of Interior had been expected to release its highly anticipated 2019 to 2024 offshore oil and gas drilling plan in early January.

The Trump administration has made opening up greater areas to offshore drilling, and holding more frequent lease sales, part of its energy dominance agenda to boost fossil fuel output for both domestic use and exports. Industry interest in several lease sales has been tepid, but the administration has said more interest is expected in the future.

The Interior Department is operating at reduced staffing levels due to the partial shutdown, which has stretched two weeks.

Nicolette Nye, a spokeswoman at the National Ocean Industries Association, said her group is expecting the shutdown will lead to a delay in the proposed plan's release. But she said members of her group should not be overly affected as long as the final drilling plan, expected to be released this summer, comes on time.

"It's always a good thing to have something in place that they can use to plan on. But it's more important to have the final plan on schedule for our companies," Nye said.

The Interior Department did not comment on a potential delay. "Due to the lapse in appropriations the Department is unable to respond to inquiries unrelated to shutdown," Heather Swift, a spokeswoman, said in an email in response to a request on the drilling proposal timeline.

Biofuel producers are worried the shutdown could lead to delays in Environmental Protection Agency (EPA) rules that would allow sales in summer of gasoline containing up to 15 percent ethanol, called E15. Agricultural interests have lobbied for the sales after the Trump administration gave breaks on ethanol requirements to some oil refiners.

"From the outset, the EPA gave itself very little wiggle room to complete the year-round E15 rulemaking before summer, so the shutdown is making a tight timeline even tighter," Renewable Fuels Association President and CEO Geoff Cooper said in a release.

Still, Cooper said we he was confident the EPA will allow year-round E15 sales before June 1.

When asked about the potential for delays, an EPA spokeswoman said the agency will only be responding to queries directly related to the government shutdown or to environmental emergencies.

This week, the Bureau of Ocean Energy Management, an office of the Interior Department, warned that public meetings related to what is slated to be the largest U.S. offshore wind farm will be rescheduled if the shutdown continues into next week.

The five meetings are meant to allow the public to comment on the 800 megawatt project's environmental impacts and are currently scheduled to take place in Massachusetts and Rhode Island between Jan. 8 and 17. The project is being developed by Avangrid Inc and Copenhagen Infrastructure Partners. The Trump administration has said development of a domestic offshore wind industry is critical to its energy strategy,

The Department of Energy and its independent office the Federal Energy Regulatory Committee are both already funded for 2019, so the shutdown has minimal effect on their programs.

(Reporting by Timothy Gardner, Nichola Groom and Jarrett Renshaw)