Industry Pushes Back On Continued Offshore Leasing Obstruction
Trade groups including the Independent Petroleum Association of America (IPAA) and the American Petroleum Institute (API) submitted comments this week to the Bureau of Ocean Energy Management (BOEM) urging the Biden administration to remove continued barriers to offshore energy production.
Arguing that offshore leasing in the Gulf of Mexico (GOM) is critically important to American energy and economic security, the trade groups also emphasized the safety of these operations:
“The GOM has been the backbone of U.S. energy production for years, providing more than one million barrels of oil equivalent per day for the last 20 years. Moreover, as BOEM has recognized and recently reaffirmed, the GOM entails the lowest GHG footprint for oil and gas production. GOM oil and gas production also involves relatively few and highly regulated air and water emissions and is located far from communities and sensitive ecological receptors.”
The letter also calls for the immediate finalization of BOEM’s five-year offshore leasing plan that has been long delayed and includes just three offshore lease sales over the next five years – the lowest number of lease sales in the history of the program:
“BOEM at a minimum must promptly finalize its Five-Year Leasing Program, must timely hold each of the lease sales scheduled thereunder, and must do so on a GOM Region-wide basis. Otherwise, the Program would amount to a mere paper exercise rather than a bona fide OCS Program for actual lease sales, thereby flouting Congressional mandates…” (emphasis added)
On the heels of the letter, the Biden administration put up another roadblock this week with the decision to delay Lease Sale 261. This sale, originally scheduled to be held next week, is the final offshore lease sale mandated by the Inflation Reduction Act and is the only sale scheduled to take place until 2025, the longest gap in offshore sales since 1996.
Lease Sale 261 will be on hold until the U.S. Court of Appeals for the 5th Circuit rules on BOEM’s decision to leave out six million acres under the guise of protecting the Rice’s whale, a move a federal judge promptly overturned, calling it an “inexplicable about-face on the scientific record.”
Senate Energy and Natural Resources Committee Chair Sen. Joe Manchin (WV-D) blasted the administration’s move:
“BOEM is once again blaming the courts for delaying the sale, but the delays are entirely the administration’s fault. The Department of the Interior was so eager to meet the demands of environmental groups to restrict the sale that it bypassed important legal requirements leading to this litigation.” (emphasis added)
Similarly, API’s Vice President of Upstream Policy Holly Hopkins said BOEM’s decision demonstrated the administration’s “willingness to ignore the clear and growing need to expand American energy leadership.” She continued:
“The U.S. oil and natural gas industry stands ready to support the nation’s energy security through reliable, lower carbon-intensive energy produced here in the U.S. Gulf of Mexico, but the Interior Department’s inconsistent policies undermine the certainty needed to invest in future production.”
Federal offshore oil production from the Gulf of Mexico (GOM) accounts for 15 percent of total U.S. crude oil production, meaning that limiting new lease sales has long-term impacts on domestic supply and export capacity. A joint report from API and the National Ocean Industries Association highlights these obvious limitations:
“With a 5-year offshore leasing program, the Gulf of Mexico is projected to produce an average of 2.6 million barrels per day of oil and natural gas from 2022 – 2040. A delay in the program could mean nearly 500,000 barrels per day less over that time period.” (emphasis added)
Now, more than ever, the need for continued American energy production is obvious. As National Ocean Industries Association President Erik Milito recently said:
“Instead of singling out offshore oil and gas with measures like acreage removal, lease stipulations, and additional mitigation requirements, the Administration should follow a regulatory process that carefully considers both the economic and national security implications of its actions.”
Across the world, geopolitical instability is making waves in the energy market as continued conflicts destabilize energy production, imports and exports.
While war in Gaza escalates, members of Congress are urging for tightened sanctions on Iranian oil exports while U.S. officials look to further enforce the price cap on Russian oil. Combined with ongoing OPEC+ production cuts, these factors threaten to drive up global oil prices even further. Yet the Biden administration continues to enact policies that limit American production and drive Americans further into the hands of our adversaries.
In addition to these continued delays, the Biden administration has approved a record low number of new offshore oil wells, according to a recent data analysis by E&E News, adding to a long list of antagonistic moves against the oil and gas industry that includes limiting or banning lease sales in Alaska, Colorado, North Dakota, and New Mexico, while adding a host of burdensome regulations to critical oil and natural gas development.
Bottom Line: A strong and robust offshore leasing program – where lease sales actually take place – is needed to ensure American energy, national, and economic security. The Biden administration’s continued delays and obstructions flout this progress and only embolden foreign oil providers where drilling is done less responsibly.