President Biden has once again reduced oil and gas leasing after focusing on ramping up production from exciting oilfields in the last couple of years. In September, the Biden administration’s Interior Department launched a five-year plan for offshore oil drilling that included just three sales. They are all located in the Gulf of Mexico and are expected to take place in 2025, 2027 and 2029. This is the lowest number of sales in any five-year plan since the publishing of the plan began in 1980.
Since his inauguration as president, Biden’s approach to oil and gas has been complicated, with him trying to strike the balance between maintaining U.S. energy security and striving for a green transition. During his campaign trail, Biden pledged to bring an end to federal leasing. This led him to sign a series of executive orders in his first month in office, directing the Interior Department to halt new oil and natural gas leases on public lands and waters pending a comprehensive review of the federal leasing programme. This move was aimed at reducing the quantity of carbon emissions released in the U.S. in line with Paris Agreement aims, following the country’s re-entry into the agreement.
This move was eventually unsuccessful, as just a few months later a federal judge blocked Biden’s pause on new oil and gas leases, following significant pressure from the energy industry and several state governments. The ruling of U.S. District Judge Terry Doughty responded to a lawsuit filed by Louisiana Republican Attorney General Jeff Landry and officials in 12 other states. His ruling worked nationwide as a preliminary injunction on Biden’s decision.
This was later backed up in 2022, as Doughty said that the Interior Department had violated federal law when it cancelled both onshore and offshore leasing on federal lands. He explained that the government is required to hold lease sales under the Mineral Leasing Act and the Outer Continental Shelf Lands Act and that only Congress holds the power to stop oil and gas leasing. The ruling applied to Alabama, Alaska, Arkansas, Georgia, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Texas, Utah, and West Virginia.
This continual back and forth during Biden’s term in government shows the dedication of the Biden administration to a green transition and the power that oil and gas companies hold in the U.S. Several states continue to support oil and gas operations as they bring in significant revenues for the state. Biden’s recent move to reduce offshore oil and gas leasing has drawn significant criticism from all sides. Energy companies say the move will drive up fuel prices, while environmentalists worry it will be detrimental to climate change.
The president of the National Ocean Industries Association, Erik Milito, stated that the move was an “utter failure for the country” that would increase gas prices, reduce Gulf Coast jobs and make the U.S. more dependent on oil imports. Meanwhile, Earthjustice President Abigail Dillen stated, “We are too far along in the climate crisis to be committing ourselves to decades of new fossil fuel extraction, especially following the hottest summer in recorded history.”
Previous five-year offshore lease programmes have included between 11 and 41 sales. However, there has been mounting pressure on Biden to curb new oil and gas drilling by environmentalists and the International Energy Agency, in line with his climate pledges and in favour of a global green transition. On average, it takes between four and 10 years from issuing a lease to producing oil, meaning that output from any new sales may not be seen for around a decade.
The Interior Department agreed to the minimum number of oil lease sales needed to expand its offshore wind programme, which is linked to fossil fuel leasing under federal law. Under the Inflation Reduction Act, introduced last year, oil and gas lease sales are a prerequisite for new offshore wind power auctions. The secretary of the interior, Deb Haaland, stated “The Biden-Harris administration is committed to building a clean energy future that ensures America’s energy independence.” He added that the plan “sets a course for the department to support the growing offshore wind industry and protect against the potential for environmental damage and adverse impacts to coastal communities”.
However, oil and gas companies that were hopeful about new leasing following Biden’s request to producers to ramp up their output, over the last year, to secure U.S. energy security are extremely disappointed. Many believe that this move will reduce U.S. energy dominance and will give more power to OPEC to dictate oil and gas flows, and therefore energy prices. The CEO of the American Petroleum Institute, Mike Sommers, stated “At a time when inflation runs rampant across the country, the Biden administration is choosing failed energy policies that are adding to the pain Americans are feeling at the pump. This restrictive offshore leasing program is the latest tactic in a coordinated strategy to reduce energy production, ultimately weakening America’s energy dominance, limiting consumers access to affordable reliable energy and compromising our ability to lead on the global stage.”
It seems that President Biden has disappointed almost everyone with his latest move to curb new oil and gas exploration. Oil and gas-producing states and energy firms are disappointed at the lack of sales, worried that the U.S. will lose its energy dominance in the international market and that the country’s energy security could be compromised. Meanwhile, environmental groups are concerned about the impact that new leasing could have on climate change, with no end in sight for oil and gas production in the U.S.
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By Felicity Bradstock for Oilprice.com
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