Trade groups pushed the Biden administration Oct. 6 to move ahead with a new 5-year plan for offshore oil and gas leasing that would include two sales per year in the Gulf of Mexico and one sale over the next 5 years in Alaska’s Cook Inlet.
Those numbers, amounting to 11 sales in 5 years, were the most the oil and gas industry realistically can hope to see in the next plan, given the way the proposed plan was written and the way the Outer Continental Shelf Lands Act (OCSLA) works. What the groups especially warned against was a final rule that might have fewer sales—or no sales.
The Interior Department, when it released the proposed plan in July, said it would allow “up to” 11 sales and was allowing itself the option of zero sales (OGJ Online, July 5, 2022). The public comment period for the proposal ended Oct. 6.
In a press briefing organized by the American Petroleum Institute (API), industry speakers stressed economic benefits, jobs, and a preference for domestic energy production rather than relying on such sources as the Organization of the Petroleum Exporting Countries (OPEC), which just agreed with its allies to cut supply to the market by 2 million b/d, a price-supporting move.
The uncertainties surrounding Biden administration energy plans are a financial planning problem, the speakers said. API also emphasized that in the comments it filed.
“Companies need regular access to competitive lease sales to make the long-term investment required for offshore development, particularly given the magnitude of the investments required for deepwater projects,” API said.
What the laws say
Few or no lease sales would be contrary to the intent of OCSLA, which was written to guide the “expeditious and orderly development” of resources in the federal waters of the outer continental shelf, the National Ocean Industries Association (NOIA) told Interior in its comments.
Most importantly, NOIA said, the law’s Section 18 says Interior must “prepare and periodically revise, and maintain an oil and gas leasing program” including a schedule of proposed lease sales.
NOIA also reminded Interior that the Inflation Reduction Act passed by Congress and signed by President Biden in August has language that ties offshore wind energy leasing to oil and gas lease sales, a provision negotiated by Sen. Joe Biden (D-W.Va.) with Senate Majority Leader Chuck Schumer (D-NY) and White House staff.
The Inflation Reduction Act “includes a requirement for Interior to hold oil and gas lease sales for 60,000,000 acres in the year prior to issuing an offshore wind lease,” NOIA said.
NOIA’s point was that if Democrats want to push one of their preferred energy sources, they should take into account the intent of Congress and the White House in that legislative language.
That law also required Interior’s Bureau of Ocean Energy Management (BOEM) to hold lease sales that had been scheduled in the last 5-year plan but canceled by the Biden administration. BOEM is working its way through the preparations for Lease Sales 259 and 261, to be held next year for tracts in the Gulf of Mexico.
The agency announced Oct. 6 the availability of its draft supplemental environmental impact statement for both of those sales.