Implications of Egypt’s Turmoil on Global Oil and Natural Gas Supply

Michael Ratner
Analyst in Energy Policy

The change in Egypt’s government will likely not have a significant direct impact on the global oil and natural gas markets. There may be some short-term movements in price, mostly caused by perceived instability in the marketplace, but these would most likely be temporary. However, prolonged instability that raises the specter of spreading to other oil and natural gas producers in the region would likely add to upward price pressures. Although Egypt is considered an energy producer or net exporter overall, its oil and natural gas exports are not large enough to affect regional or global prices. The most serious impact would be on regional recipients of its natural gas exports.

Egypt’s main influence on energy markets is its control of the Suez Canal and the Suez- Mediterranean oil pipeline (SUMED). The current low utilization of these two pieces of infrastructure would likely limit any effect of their closure in the near term. Both the oil and natural gas industry would, over time, find alternative routes to circumvent the canal and pipeline if necessary. 


Date of Report: May 4, 2011
Number of Pages: 9
Order Number: R41632
Price: $19.95

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Israel’s Offshore Natural Gas Discoveries Enhance Its Economic and Energy Outlook

Michael Ratner
Analyst in Energy Policy

Israel has been dependent on energy imports since it became a nation in 1948, but the recent offshore natural gas discoveries could change that and possibly make Israel an exporter of natural gas. Development of the recently discovered natural gas fields—Tamar, Dalit, and Leviathan— likely will decrease Israel’s needs for imported natural gas, imported coal, and possibly imported oil. A switch to natural gas would most likely affect electric generation, but could also improve Israel’s trade balance and lessen carbon dioxide emissions. Regionally, Israel’s success thus far has sparked interest from its neighbors to explore their boundaries for energy resources and has raised concerns from Lebanon about sovereignty over the discoveries. Development of these new resources, and possibly other discoveries, would enhance Israel’s economic and energy security. Israel is in the early stages of formulating the regulatory framework to oversee the development of these resources and may seek assistance from the United States or other natural gas producing countries in weighing its options.

Key Points: 

• The new discoveries—depending upon the actual production—could represent over 200 years’ worth of Israel’s current natural gas consumption. 
• Israel’s electrical generation sector will likely be the beneficiary of the new natural gas resources. 
• Additional natural gas and possibly oil resources may exist.

Date of Report: May 4, 2011
Number of Pages: 13
Order Number: R41618
Price: $29.95

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Outer Continental Shelf Moratoria on Oil and Gas Development

Curry L. Hagerty
Specialist in Energy and Natural Resources Policy

Moratoria measures for the outer continental shelf (OCS) establish bans or restrictions on oil and gas exploration and development in federal ocean areas. With some exceptions for marine sanctuaries and monuments, no portion of the federal OCS has a permanent moratorium on oil and gas leasing and development. While some areas are under temporary development bans, such as suspensions or moratoria directed by either legislative or executive powers, most of the OCS is free of such restrictions and is considered permissible for offshore leasing activity.

Aspects of moratorium policy (either establishing or lifting temporary bans on oil and gas exploration and development) are derived from legislative and executive powers to direct offshore leasing activities. A shift in both legislative and executive moratorium policy during the 111th Congress signaled an end to measures that had banned development in some OCS areas since the early 1980s. Legislative moratoria enacted annually by Congress for about 27 years as part of the Department of the Interior appropriations acts expired on September 30, 2008. In areas where OCS leasing restrictions were changed, some preliminary oil and gas leasing activity has commenced, but no lease sales have been held.

Support for three national objectives coalesced in 2009, resulting in the removal of most congressional and executive constraints on oil and gas exploration and development: (1) promoting domestic energy production to improve the nation’s energy security, (2) enhancing federal revenue, and (3) spurring innovation and diversification in ocean energy technologies to help create new jobs. The shift in moratorium policy, along with two other developments—the start of federal offshore renewable ocean energy projects (e.g., offshore wind farms) and expanded oil and gas prospecting in deepwater areas—increased the responsibilities of the federal offshore energy program.

Around the world, changing ocean energy policies are affecting how nations govern offshore areas. Economic pressures and technological advances are driving changes in moratorium policy as the global search for energy reaches into deeper ocean waters. A number of countries are revisiting policies about offshore areas, and some countries are making claims to expand their reach for offshore resources. One venue for claims of this nature is the United Nations Convention on the Law of the Sea (UNCLOS). Although the United States has not ratified UNCLOS, the State Department has taken measures to address the U.S. extended continental shelf areas in a manner not inconsistent with the UNCLOS process. These measures signal changes in U.S. policies about moratorium areas.

In the aftermath of the Deepwater Horizon oil spill, the regulatory context is unsettled, and policymakers are considering many different options to restore regulatory and economic normalcy in the Gulf region. Congress is considering the role moratorium policy may play in this context. In the 112th Congress, moratorium policy is addressed in H.R. 1231, which was reported by the House Committee on Natural Resources on May 2, 2011.


Date of Report: May 6, 2011
Number of Pages: 19
Order Number: R41132
Price: $29.95

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Energy Projects on Federal Lands: Leasing and Authorization

Adam Vann
Legislative Attorney

Recent concerns over energy supply and pricing have led some to look increasingly to federal lands as a potential energy source. This report explains the legal framework for energy leasing and permitting for onshore lands subject to the control of the federal government.

The report first reviews the laws and regulations affecting leasing of federal lands for exploration and production of oil, natural gas, and coal, as well as the permits that lessees must obtain in order to explore for and produce these resources. This leasing process has evolved over the last century under the framework established by the Mineral Leasing Act of 1920 (MLA). Oil, natural gas, and coal leasing and production on federal land pursuant to this act are currently overseen by the Bureau of Land Management (BLM), an agency within the U.S. Department of the Interior (DOI). Federal lands that the area’s Resource Management Plan (RMP) determines to be amenable to oil, coal, or natural gas exploration and production may be leased by BLM, so long as such activities in that area are not prohibited by statute or regulation. Such lands are usually leased to the highest bidder as determined by competitive auction. Leaseholders are generally required to pay both rental fees and royalties (a percentage of the value of produced oil, natural gas, or coal) to the U.S. government.

The report also addresses existing laws and regulations that govern the use of federal lands for renewable energy projects, including geothermal, wind, and solar energy. BLM oversees permitting for these projects. Geothermal projects are leased in accordance with the requirements of the Geothermal Steam Act of 1970. That act functions similarly to the MLA; lands that are amenable to geothermal projects are leased to the highest qualified bidder. In contrast, wind and solar projects on federal lands are not authorized by leases, but rather by obtaining a right-of-way from BLM. These rights-of-way are issued pursuant to the requirements of Title V of the Federal Land Policy and Management Act (FLPMA), and holders of these rights-of-way must make monthly rental payments to the U.S. government.

This framework provides BLM and the federal government with flexibility to use federal lands to help satisfy the nation’s energy needs, while generating revenue for the federal government and also protecting environmentally sensitive areas.


Date of Report: May 4, 2011
Number of Pages: 24
Order Number: R40806
Price: $29.95

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Clean Energy Standard: Potential Qualifying Energy Sources

Kelsi Bracmort, Coordinator
Analyst in Agricultural Conservation and Natural Resources Policy

Phillip Brown
Analyst in Energy Policy

Peter Folger
Specialist in Energy and Natural Resources Policy

Mark Holt
Specialist in Energy Policy

Michael Ratner
Analyst in Energy Policy

Fred Sissine
Specialist in Energy Policy

A clean energy standard (CES) has been identified as one possible legislative option to encourage a more diverse domestic electricity portfolio. A CES could require certain electricity providers to obtain a portion of their electricity from qualifying clean energy sources. A CES is broader than a renewable energy standard (RES), including “clean” energy sources along with renewable energy sources. The RES has been a topic of legislative attention since at least the 105th Congress. Some assert that a CES could lead to economic growth, reduce greenhouse gas emissions, and secure U.S. leadership in clean energy technology. Others argue that a CES could lead to higher electricity prices, necessitate additional financial investment in grid infrastructure, and—in some cases—depend on energy technologies that are not yet established for widespread commercialscale use.

Without a CES, some clean energy sources—mostly the renewables—may face barriers to penetrate and gain traction in the electricity market. Renewable sources (including conventional hydroelectric) constituted roughly 10% of total electric power net generation in 2010. Analysis from the Energy Information Administration (EIA) suggests that without a CES or RES, electricity-generating capacity for renewable sources will grow 0.9% from 2009 to 2035, with renewables comprising approximately 13.6% of total electricity-generating capacity in 2035, compared with 12.5% in 2010. EIA analysis indicates that most of the growth in renewable electricity generation in the power sector from 2009 to 2035 will consist of generation from wind and biomass facilities.

Policy, economic, and technical considerations arise when evaluating CES options. A primary question in the CES legislative discussion is which energy sources would be eligible to participate. Congress could take into account the following clean energy source selection criteria: geographic location of the energy source, energy source supply levels, job creation associated with the energy source, the implementation time frame, environmental regulations (existing and forthcoming), and cost. Each potential qualifying energy source has advantages and disadvantages, and has different natural resource, economic, and technical challenges. For instance, the cost to build, operate, and maintain clean energy power plants varies widely, from $63 (natural gas advanced combined-cycle) to $312 (solar thermal) per megawatt-hour. Moreover, some of the sources proposed have encountered public opposition (e.g., nuclear energy). Many proposed sources (e.g., solar) have received government support in the form of research and development assistance or favorable tax treatment. In some cases, the technology that might allow certain sources to qualify for a CES is not yet at commercial scale (e.g., coalfired plants equipped with carbon capture and sequestration). Cross-cutting issues including electricity transmission, variability, and material cost and supply are associated with large-scale electricity production for many of the commonly discussed clean energy sources,.

Many questions will need to be answered if a CES is established. How much clean electricity can be generated from each qualifying energy source, given the proposed CES time frame? Should a carbon accounting parameter be assigned to each source? Will a time come when some resources (e.g., wind, solar) used to generate clean electricity cease to be considered a “free” resource? How would a CES interact with state renewable electricity requirements? Who would assume the costs of new transmission capacity?


Date of Report:May 2, 2011
Number of Pages: 25
Order Number: R41797
Price: $29.95

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