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Biden calls for up to three oil and gas lease sales in the Gulf of Mexico, disappointing all sides

By MATTHEW DALY, Associated Press
Published: September 29, 2023, 7:41am

WASHINGTON (AP) — President Joe Biden’s administration on Friday proposed up to three oil and gas lease sales in the Gulf of Mexico but none in Alaska as it tries to navigate between energy companies seeking greater oil and gas production and environmental activists who want Biden to shut down new offshore drilling in the fight against climate change.

The five-year plan includes proposed sales in the Gulf of Mexico, the nation’s primary offshore source of oil and gas, in 2025, 2027 and 2029. The three lease sales are the minimum number the Democratic administration could legally offer if it wants to continue expanding offshore wind development.

Under the terms of a 2022 climate law, the government must offer at least 60 million acres of offshore oil and gas leases in any one-year period before it can offer offshore wind leases.

The provision tying offshore wind to oil and gas production was added by Democratic Sen. Joe Manchin of West Virginia, a top recipient of oil and gas donations and a key vote in favor of the climate law, which was approved with only Democratic votes in the House and the Senate. The landmark law, the Inflation Reduction Act, was signed by Biden as a key step to fight climate change but includes a number of provisions authored by Manchin, a centrist who represents an energy-producing state.

For instance, if the Biden administration wants to expand solar and wind power on public lands, it must offer new oil and gas leases first.

“The Biden-Harris administration is committed to building a clean energy future that ensures America’s energy independence,” Interior Secretary Deb Haaland said in a statement. The proposed offshore leasing program “represents the smallest number of oil and gas lease sales in history” and “sets a course for (the Interior Department) to support the growing offshore wind industry,” she said.

The lease program will guard against environmental damage caused by oil and gas drilling and other adverse impacts to coastal communities, Haaland said.

Manchin on Friday sharply criticized the administration’s announcement and said limiting oil and gas lease sales would result in fewer renewable energy leases under the terms of the climate law.

“You can’t have one without the other,” he said. “It makes no sense at all to actively be limiting our energy production.”

Still, the plan allows drillers such as Chevron, BP and ExxonMobil to participate in as many as three oil and gas auctions over the next five years, a top priority for the industry that could lock in decades of offshore oil and gas production.

The plan goes against Biden’s campaign promise to end new offshore drilling and could become a political liability for the Democratic president, who already faces sharp opposition from environmental groups angry at his decision earlier this year to approve ConocoPhillips’ massive Willow oil project in Alaska.

ConocoPhillips CEO Ryan Lance called Willow “the right decision for Alaska and our nation.” But environmental groups call the $8 billion project a “carbon bomb” that would betray Biden’s pledge to cut planet-warming greenhouse gas emissions in half by 2030. Opponents mounted a #StopWillow campaign on social media that has been seen hundreds of millions of times.

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Interior Deputy Secretary Tommy Beaudreau appeared to acknowledge the contradiction on Thursday, telling a Senate hearing that the administration’s options were limited by the climate law.

“The (oil leasing) program is definitely informed by the IRA and the connection that the IRA makes between offshore oil and gas leasing and renewable energy leasing,” he said, referring to the Inflation Reduction Act.

The Interior Department can’t sell the rights to drill for oil and gas offshore without first publishing a schedule that outlines its plans. The administration faced a Saturday deadline to release the five-year plan.

Environmentalists said the decision to lease more oil reserves would worsen climate change impacts from oil and gas emissions and leave coastal communities exposed to spills that occur regularly in the Gulf of Mexico. Beth Lowell, with the group Oceana said Biden was “showing the world that it’s OK to prioritize polluters over real climate solutions.”

Any new leases will face legal challenges from groups such as the Earthjustice law firm, whose president, Abigail Dillen, said Friday that the new plan represented a “missed opportunity” to curb drilling.

“We will continue to work alongside Gulf Coast communities to challenge new leasing and transition beyond a fossil economy that is poisoning people and driving climate change,” Dillen said in a statement.

Industry groups also blasted the plan. The American Petroleum Institute, the top lobbying group for the oil and gas industry, said Biden “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, limiting consumers’ access to affordable reliable energy and compromising our ability to lead on the global stage,” API CEO Mike Sommers said.

The oil industry and its allies have said since last year that the administration’s delay in finalizing a new offshore leasing framework after the prior five-year plan expired in 2022 would cause problems for companies trying to make their own plans. They’ve called for more leasing, not less, to ensure a steady supply of domestic oil.

At the last lease sale, in March, companies including Chevron, BP and ExxonMobil bid $264 million for drilling rights in the Gulf, a sharp rise from the previous auction in 2021. That lease sale was the first after the Biden administration raised royalty rates that companies must pay on the oil they produce to 18.75%, up from the previous rate of 12.5%.