American govt urged to hammer out ‘robust’ offshore oil & gas leasing programme

While the permitting reform is at the top of the list concerning the biggest hurdles to the development of new and expansion of existing energy projects in the United States, the lack of a new five-year offshore leasing programme is regarded as a significant lapse by the oil and gas industry. To get this sorted out, 18 energy trade groups, including the American Petroleum Institute (API), have called on the Biden administration to fortify U.S. energy security by finalising a new five-year programme for federal offshore leasing.

In July 2022, the Biden administration proposed a new, five-year offshore oil and gas leasing programme, which narrows the area considered for leasing to the Gulf of Mexico and Cook Inlet while removing federal waters off the Atlantic and Pacific coasts from consideration. As the DOI’s proposed five-year offshore leasing programme also entailed an option to hold zero lease sales, the oil and gas industry came down on this plan like a ton of bricks. On the other hand, climate activists were quick to seize this opportunity to intensify their efforts to make it happen.

Despite the pressure from both sides or perhaps due to it, as the Biden administration found itself at crossroads, the previous five-year offshore leasing programme expired with no new plan in place. Aiming to get to grips with this, the energy trade groups urged the administration in a letter, which was sent to President Joe Biden, to finalise a programme that includes the maximum number of lease sales and begin the pre-leasing work required to start holding sales in 2024.

“The world needs American energy leadership, but that leadership requires supportive energy policies from Washington. Without the certainty and predictability provided by a robust five-year leasing programme, including yearly lease sales to obtain new acres, companies may explore opportunities elsewhere. Their decisions and the resulting economic, energy, and environmental benefits will be realized elsewhere, not in the U.S,” outlined the letter.

This letter was signed by American Petroleum Institute, Consumer Energy Alliance, Louisiana Mid Continent Oil and Gas Association, National Ocean Industries Association, U.S. Chamber of Commerce, American Chemistry Council, American Exploration & Production Council, EnerGeo Alliance, Energy Workforce & Technology Council, Gulf Economic Survival Team, Independent Petroleum Association of America, International Association of Drilling Contractors, Louisiana Oil & Gas Association, Louisiana Association of Business and Industry, Manufacture Alabama, Southeast Oil & Gas Association, Texas Oil and Gas Association, and U.S. Oil & Gas Association.

Aside from highlighting the role that offshore production plays in American energy security, local economies on the Gulf coast and conservation programmes, these groups also reiterated the importance of offshore production in helping the Biden administration achieve its climate goals, citing a recent study on global oil production and emissions by ICF that found that U.S. Gulf of Mexico production has a carbon intensity 46 per cent lower than production in other parts of the world.

“The success of emerging offshore energy segments, which are prioritised by the Biden Administration, is closely intertwined with the long-term success of the domestic offshore oil and gas sector. Many companies operating in offshore energy, with roots in the oil and gas industry, are actively engaged in finding solutions, expanding, and building new energy segments like offshore wind and carbon capture and storage (CCS). However, the lack of a new offshore oil and gas leasing programme introduces uncertainty that will inevitably hinder companies’ ability to invest in these promising energy avenues,” underlined the letter.

This letter comes after a recent Stipulated Stay agreement in Sierra Club v. National Marine Fisheries Service that imposed restrictions on an estimated 11 million acres in the U.S. Gulf of Mexico. API claims that this leaves the offshore energy industry in “an extended period of uncertainty.”

When the agreement was announced, API, EnerGeo Alliance, and National Ocean Industries Association, underlined: “The men and women of America’s energy industry take seriously their responsibilities to the communities and the environment where they live and work.

“This private settlement agreement between the federal government and environmental activists places unfounded restrictions on operations in the U.S. Gulf of Mexico that severely hamper America’s ability to produce energy in a region that is responsible for the lowest carbon-intensive barrels in the world.

“Despite no evidence to warrant this far-reaching ban on operations after extensive data collections, today’s agreement undermines the integrity of legitimate conservation and habitat protection efforts, violates the explicit directives of Congress in enacting the Inflation Reduction Act, and harms America’s energy independence.”