Biden cancels three offshore oil lease sales, curbing new drilling this year

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The Interior Department confirmed on Wednesday that it would not hold three oil and gas lease sales in the Gulf of Mexico and off the coast of Alaska that were due to take place, taking millions of acres off the block. auction.

The decision, which comes as U.S. gas prices hit record highs, effectively ends the possibility of the federal government holding a lease sale in coastal waters this year. The Biden administration is poised to let the national offshore drilling program expire next month with no new plan in place.

While President Biden has spoken in recent weeks about the need to supply oil and gas to Europe so those countries can stop importing energy from Russia in light of the ongoing war in Ukraine, the move would mark a victory for climate activists determined to rein in America’s fossil fuels. fuel leasing.

Barring unexpected action, the current five-year offshore drilling program will end at the end of June. The interior cannot hold new oil and gas lease sales until it completes a replacement plan. But although the federal government is legally required to prepare one, the administration has not released its proposal — nor have officials said when it might arrive.

The imminent expiry of the program means that the government no longer has enough time to organize the three remaining oil and gas concession sales planned under the current plan. Interior spokeswoman Melissa Schwartz cited lack of interest from oil companies, along with legal hurdles and a lack of time, as reasons for canceling the planned auction.

In an email late Wednesday, Schwartz said the department “will not be moving forward” with a sale of approximately 1 million acres in Cook Inlet, Alaska “due to lack of interest from the public.” ‘industry for hire in the region’.

She added that the department will not hold “sales of leases 259 and 261 in the Gulf of Mexico region, due to delays due to factors such as conflicting court rulings that have impacted work on these proposed lease sales”.

The decision is likely to frustrate, but not surprise, the oil and gas industry. Its trade groups and lobbyists have sought to sound the alarm for months over the June 30 lease program expiration date. A study commissioned by the American Petroleum Institute found that a disruption to the program would cost tens of thousands of jobs and billions in lost revenue for state and local communities.

Replacing the current plan will not happen overnight. The timeline set out in the regulations governing the program requires a three-step process involving environmental scanning, public comment periods, and review by the president and Congress.

It usually takes the government at least six months to a year to finalize a new offshore drilling plan. This means that even if the Interior unveils a new proposal in the coming weeks, energy companies will know the earliest if they will have access to new leases, and where, it is probably early 2023.

Amid rising oil prices, inflationary pressure and the upcoming midterm elections, there is a lot of uncertainty about how far the administration is willing to go in offshore drilling.

As a candidate, Biden promised to make the fight against climate change a priority. He temporarily halted new oil and gas leases on federal lands and waters a week after taking office. But after a Louisiana judge overturned the moratorium last summer, administration officials said they were legally obligated to continue renting.

Since then, political pressure to expand drilling on federal lands and waters has grown. Oil and gas industry lobbyists and Republican lawmakers have tried to blame high gas prices on the president’s climate policies. For his part, Biden has moved from talking about banning new drilling to proposing a new policy that would push oil companies to drill on unused leases.

Amid infighting and a wider political divide over the future of oil and gas leasing, the administration delayed a decision on whether to continue selling new offshore concessions and, if so, how much of the country’s coastal waters should be in place. at auction.

Biden officials have said they are working on his proposal for a new offshore program, but describe industry concerns as overblown. According to Interior figures, more than 8 million acres of offshore federal waters already under lease remain unused.

Environmental advocates, meanwhile, have argued that the environmental risks posed by offshore drilling outweigh the benefits of future leases. Offshore oil and gas production accounts for a relatively small percentage of the country’s overall supply, they say, and the 2010 BP oil spill in the Gulf crippled the seafood industry, hurt tourism and exhausted tax revenue in the southeastern states.

“Big Oil is using whatever it can find to try to extend the life of a dying fossil fuel industry. They lie when they say they need more leases,” said Diane Hoskins, campaign manager for environmental group Oceana. “We can’t get out of high gas prices, and it would take years or decades for new leases to start producing.”

Of the 11 lease assignments planned under the current program, seven have been successfully completed. The Interior held another in November, auctioning off 80 million acres in the Gulf of Mexico in the biggest sale of offshore oil and gas leases in the country’s history. Only a fraction of those leases were sold, and a federal judge later threw them out, citing flawed environmental analysis conducted under the Trump administration.

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