Biden scraps three offshore oil lease sales and limits new drilling this year

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The Interior Department confirmed Wednesday it will not go through with three proposed oil and gas lease sales in the Gulf of Mexico and off the coast of Alaska, taking millions of acres off the auction block.

The decision, made as US gas prices have hit record highs, effectively ends the possibility of the federal government holding a coastal water lease sale this year. The Biden administration is poised to phase out the nationwide offshore drilling program next month without a new plan.

While President Biden has spoken in recent weeks about the need to get oil and gas supplies to Europe so those nations can stop importing energy from Russia in the face of the ongoing war in Ukraine, the move would mark a victory for climate activists who aim to curb US fossil fuel leasing.

Barring unexpected action, the current five-year offshore drilling program will expire at the end of June. Interior cannot hold new oil and gas lease sales until it completes a backup 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 come.

The imminent end of the program means the government will not have enough time to complete the three remaining oil and gas lease sales planned under the current plan. Interior spokeswoman Melissa Schwartz cited a lack of interest on the part of the oil companies as well as legal hurdles and time pressure as reasons for the failure of the planned auctions.

In an email Wednesday night, Schwartz said the department will “not move forward” with a sale of about 1 million acres in Alaska’s Cook Inlet “due to the industry’s lack of interest in leasing in the region.”

She added that the department “will not hold lease sales 259 and 261 in the Gulf of Mexico region due to delays caused by 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 been trying for months to sound the alarm about the June 30 expiration date of the leasing program. A study commissioned by the American Petroleum Institute found that failure to implement the program would cost tens of thousands of jobs and billions in state and local revenues.

Replacing the current plan will not happen overnight. The schedule set out in the regulations for the program requires a three-step process that includes environmental analysis, public comment periods, and presidential and congressional review.

It typically takes the government at least six months to a year to complete a new offshore drilling plan. That means that even if Interior comes up with a new proposal in the coming weeks, energy companies won’t know if and where they’ll have access to new leases until early 2023 at the earliest.

With oil prices rising, inflationary pressures and mid-term elections looming, there is great uncertainty about how far the government is willing to go on offshore drilling.

As a candidate, Biden pledged to make tackling climate change a priority. A week after taking office, he temporarily halted new oil and gas leasing on state land and waters. But after a Louisiana judge lifted the moratorium last summer, administration officials said they are legally required to continue leasing.

Since then, political pressure to expand drilling to federal land and water has increased. Oil and gas industry lobbyists and Republican lawmakers have tried to blame the president’s climate policies for high gas prices. For his part, Biden has gone from talking about banning new drilling to proposing a new policy that would force oil companies to drill on idle leases.

Amid internal squabbling and a broader political disagreement over the future of oil and gas leasing, the government has delayed deciding whether to continue selling new offshore leases and, if so, how much of the country’s coastal waters will be put up for auction.

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

Conservationists, meanwhile, argue that the environmental risks posed by offshore drilling outweigh the benefits of future leases. Offshore oil and gas represents a relatively small percentage of the country’s total supply, they argue, and the BP oil spill of 2010 in the Gulf crippled the fishing industry, hurt tourism and drained tax revenues in the southeastern states.

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

Of the 11 rental sales planned as part of the current program, seven were successfully completed. Interior held another in November, auctioning 80 million acres in the Gulf of Mexico in the largest offshore oil and gas lease sale in the country’s history. Only a fraction of those leases were sold, and a federal judge later overturned them, citing a flawed environmental analysis conducted during the Trump administration.

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