US five-year offshore oil & gas leasing plan puts Biden between the devil and the deep blue sea

Following a proposed final program for 2024-2029, containing the lowest number of offshore oil and gas lease sales in American history, the Biden administration found itself stuck between a rock and a hard place while trying to reconcile President Joe Biden’s climate agenda with the giveaways to the fossil fuels lobby, which Congress greenlighted in 2022 in a bid to enable offshore wind leasing. With only three lease sales in the pipeline, the new plan aims to phase down oil and gas leasing in the Gulf of Mexico and ensure rapid growth of offshore wind. This controversial plan has caused quite a stir, sparking outrage not just within the oil and gas industry but also among environmental groups.

While the new proposed five-year offshore oil and gas leasing program is under fire on all sides of the equation due to its contents, the Biden administration was more than 450 days late in releasing it. This delay in completing the five-year program and holding lease sales is seen as a negative development from the oil and gas industry’s perspective, as it threatens future supply and puts American jobs and the economy at risk, jeopardizing energy investment in numerous American industries and enabling other countries to take the lead in global energy production. In line with this, Big Oil claims that the delay has left Congress, industry, and taxpayers in the dark and created a void that OPEC+ nations have been more than happy to fill.

At the end of July 2022, U.S. Senator Joe Manchin and Senate Majority Leader Chuck Schumer revealed a decision to add climate provisions to a budget reconciliation legislation, expected to provide $369 billion in energy and climate investments to promote zero and low-carbon energy while also supporting domestic production of offshore oil and gas, as Congress made a controversial move at the time by tying the fate of offshore wind leasing to the approval of new oil and gas lease sales. However, the plan behind the Inflation Reduction Act (IRA) was still expected to turbocharge clean energy developments in the U.S. while also investing in the technologies needed for all fuel types – hydrogen, nuclear, renewables, fossil fuels, and energy storage – to be produced and used in the cleanest way possible.

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As impressive as the contents of the bill sound, Wood Mackenzie’s recent analysis still estimates that investments amounting to a whopping $10 trillion are needed for the U.S. to reach its net-zero by 2050 goal along with additional guidance from the Biden administration to see the IRA truly kick-start that investment. The efforts to increase the nation’s clean energy capacity are impeded by the broken permitting process, which is halting U.S. energy development. The ramp-up of renewable energy, such as solar and wind, is perceived as a surefire way to reach net-zero goals since renewables are touted as a cure for climate change issues, which are tying the world in knots, following the heatwaves that ravaged the globe this summer.

Before the IRA ever graced American energy laws with its presence, the U.S. Interior Department had been entrusted with preparing a five-year offshore oil and gas leasing program. This process has been ongoing for the past 45 years to meet the U.S. energy needs for the ensuing five-year period, detailing a schedule for regular oil and natural gas lease sales, including in the Gulf of Mexico. In July 2022, the Biden administration proposed a new, five-year offshore oil and gas leasing program, which narrowed the area considered for leasing in 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 program also entailed an option to hold zero lease sales, the oil and gas industry came down on the 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. At the end of December 2022, several environmental organizations, including Oceana, expressed their opposition to further lease sales, reminding that Biden promised during his presidential campaign to end new leasing for offshore drilling while the International Energy Agency said that nations need to stop developing new oil and gas fields if global warming was to stay within relatively safe limits.

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

Many are of the opinion that the U.S. is in need of an energy strategy that features natural gas as a crucial element along with renewable energy to come to grips with climate and energy challenges. While the infrastructure for renewable energy takes time to build and is not always seen as reliable, causing cities to utilize carbon-intensive sources like coal and heating oil during the cold winter months, natural gas is perceived to be a bridge fuel to a carbon-free world that can be deployed immediately as America continues to develop renewable energy infrastructure to meet the energy demands of the future. 

While taking steps to comply with the requirements of the Inflation Reduction Act concerning offshore oil and gas and renewable energy leasing, the U.S. Department of the Interior (DOI) released the new proposed final program and final programmatic environmental impact statement (EIS) for the 2024–2029 National Outer Continental Shelf Oil and Gas Leasing Program (National OCS Program), reflecting America’s efforts towards a rapid and accelerating shift to clean energy.

In a move that the Big Oil lobby certainly does not appreciate, the Biden administration decided on a proposed final plan, which includes a maximum of three potential oil and gas lease sales in the Gulf of Mexico area scheduled in 2025, 2027, and 2029. These three proposed lease sales are said to be the minimum number that would enable the Interior Department to continue to expand its offshore wind leasing program through 2030 in compliance with the terms of the IRA. The plan entails zero oil and gas lease sales in the Atlantic, Pacific, and Alaskan waters.

Furthermore, the reduction to a maximum of three potential lease sales is anticipated to bring the federal offshore oil and gas program in line with the Biden-Harris administration’s goal of net-zero emissions by 2050 and meet the IRA’s requirements for future offshore renewable energy leasing. The areas considered for leasing and the number of potential lease sales in the 2024-2029 proposed final program have been significantly narrowed from the previous administration’s original proposal of 47 lease sales off all coastal areas in the U.S. over a five-year period.

The previous proposal is seen as a risk to local coastal economies, particularly for communities along the east and west coasts where offshore oil and gas development has not been authorized in decades, if ever. The DOI reiterates that the IRA does not allow the Bureau of Ocean Energy Management (BOEM) to issue a lease for offshore wind development unless the agency has offered at least 60 million acres for oil and gas leasing on the OCS in the previous year.

Therefore, the three potential sales in the proposed final program will enable the DOI’s offshore wind energy program to continue to issue offshore wind leases, ensuring continued progress toward the administration’s goal of 30 gigawatts of offshore wind by 2030. One of Offshore Energy’s previous interviews also flagged the U.S. offshore wind sector for growth.

The new five-year program will limit leasing to the Gulf of Mexico OCS, where there is existing production and infrastructure, including the portions of the Western, Central, and Eastern GOM planning areas not currently under presidential withdrawal. Before finalizing the new program, BOEM carefully considered more than 760,000 comments received in response to the proposed program and draft programmatic EIS.

Deb Haaland, Secretary of the Interior, commented: “The Biden-Harris administration is committed to building a clean energy future that ensures America’s energy independence. The proposed final program, which represents the smallest number of oil and gas lease sales in history, sets a course for the Department to support the growing offshore wind industry and protect against the potential for environmental damage and adverse impacts to coastal communities.” 

Before the Secretary of the Interior can formally approve the new five-year offshore oil and gas leasing program, a 60-day waiting period will be initiated with the publication of the proposed final program and final programmatic EIS in the Federal Register. Aside from this, BOEM will publish a call for information and nominations (Call) regarding the potential future Gulf of Mexico oil and gas lease sales included in the 2024–2029 National OCS Program.

The publication will initiate a 30-day comment period, during which BOEM will seek comments from the industry on interest in the areas proposed for leasing, including nominations or indications of interest in specific lease blocks within the area; and from additional parties regarding geological, environmental, biological, archaeological and socioeconomic conditions, use conflicts, or other information that could affect potential leasing and development.

Afterward, the information submitted will be used to help determine which blocks within the Gulf of Mexico program area may be offered for leasing, prioritize areas with greater potential for oil and gas development, develop potential lease terms and conditions, identify use conflicts and mitigation measures, and assist in BOEM’s planning and environmental review process.

BOEM will also publish a notice of intent to prepare a programmatic EIS in the Federal Register to analyze the potential impacts of a representative lease sale in the GOM during the 2024–2029 National OCS Program, as well as ongoing and potential associated site and activity-specific oil and gas related activity approvals.

The dust is not anywhere near close to settling down after the new five-year offshore oil and gas leasing program came to light. Describing the incoming reactions from Big Oil and the fossil fuels lobby as disappointment is putting it mildly and a huge understatement since they see this plan as a direct threat to American energy security. One of those unhappy with the contents of the new program is the Independent Petroleum Association of America (IPAA), a national upstream trade association representing thousands of independent oil and natural gas producers and service companies across the United States.

Jeff Eshelman, IPAA President & CEO, underscored: “It’s clear that the Biden Administration has chosen to align its policy decisions with environmental activists rather than put the best interest of American consumers first. A plan with only three leases in five years will not only hamper American production but jeopardize our energy security and will result in hundreds of millions of dollars of lost revenue to coastal states and the federal treasury. The sad truth is that this plan will force the U.S. to get oil from other nations rather than develop American resources by American companies.”

The second important player in the U.S. oil and gas industry, which is far from happy with the proposed program, is the American Petroleum Institute, as it interprets the Biden administration’s long-delayed release of a final five-year program for federal offshore leasing, as part of a raft of failed energy policies that are adding to the pain at the pump.

Mike Sommers, API’s President and CEO, pointed out: “At a time when inflation runs rampant across the country, the Biden administration 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, ultimately weakening America’s energy dominance, limiting consumers’ access to affordable reliable energy, and compromising our ability to lead on the global stage. For decades, we’ve strived for energy security and this administration keeps trying to give it away.”

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Another lobbyist for the U.S. oil and gas industry, the House Committee on Natural Resources, sees the Department of Interior’s five-year offshore leasing plan, which is 457 days late, as a punishment for American Industries and reiterates its commitment to holding agencies accountable when they fail to meet basic deadlines and jeopardize U.S. national and energy security.

Over the course of the 118th Congress, the House Committee on Natural Resources has worked to support American energy independence through the passage of H.R. 1, the Lower Energy Costs Act. The committee also held field hearings and advanced other pieces of legislation to remove regulatory burdens and conduct oversight of the Biden administration’s policies. Additionally, the committee recently considered the BRIDGE Production Act, which would mandate four offshore oil and gas sales to be held in 2024 and 2025 and help reduce regulatory burdens and delays to American energy production.

Bruce Westerman, Chairman of House Committee on Natural Resources, outlined: “The proposed final program, with three potential oil and gas lease sales in the Gulf of Mexico is nothing short of a slap in the face to the American taxpayer. And for what? This plan will go down as one of the great blunders of the Biden administration. American consumers will pay the price for this administration’s decision to prioritize its offshore wind leasing program over the backbone of our energy sector. Congress must act to ensure the future of our offshore leasing program in the wake of this disastrous decision.

“Publishing this plan more than a year late while depleting our strategic energy reserves to make up for it is the type of lose-lose policymaking that’s become the Biden administration’s calling card. Families are struggling to keep gas in their tanks yet President Biden refuses to access the abundant energy resources in our own backyard. Republicans are delivering real solutions for the American people like the Lower Energy Costs Act while Biden wages war on domestic energy producers. American families pay the cost.”

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The National Ocean Industries Association (NOIA) is also dissatisfied with the U.S. Department of the Interior’s next federal offshore oil and gas leasing program, which it sees as “an utter failure for the country.”

Erik Milito, NOIA President, underlined: “President Biden’s approach to severely limit leasing significantly curtails access to a critical national asset at a time when energy inflation is rampant, the likelihood of a national recession looms, and global efforts are intensifying to curb greenhouse gas emissions. The White House simply ignores our energy realities, once again limiting U.S. energy production opportunities.

“With global demand at record levels and continuing to rise, regressive policies like this serve to harm Americans of all walks of life by putting upward pressure on prices at the pump, destroying good-paying jobs that form the fabric of Gulf Coast communities, and relinquishing geopolitical advantages of energy production to countries like Russia, Iran, and China. Furthermore, the decision to postpone environmental analyses for individual lease sales needlessly compounds the erosion of long-term confidence and certainty in the Gulf of Mexico region.

“Environmental assessments for lease sales typically take one to two years to complete, which is precisely why they are conventionally carried out in tandem with leasing program development. Every prior administration, irrespective of party, followed this process in a way that enabled uninterrupted leasing activities. The choice to slow walk lease sales while the Interior Department embarks on environmental work is just setting the table for potential future delays, including from litigation by activist groups, and an offshore energy leasing cliff.”

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Milito further noted: “Policies that limit domestic offshore development force us to rely more on energy imports, often from countries with higher emissions. This jeopardizes our energy security, and economic prosperity, and undermines our efforts to reduce emissions and combat climate change—goals purportedly championed by the current administration.”

Following the opposition to the 11 sales initially proposed in the draft program, Earthjustice, a nonprofit environmental law organization, agrees that the new plan reflects a historically low number of lease sales and spares Alaska’s Cook Inlet from future leasing. Even though the new oil and gas leasing plan is considerably slimmed down from the original proposal, the NGO says that it still offers up the Gulf to the oil and gas industry, which it does not consider to be a good idea, as the lease sales under this program would lock the U.S. into up to 70 additional years of offshore oil and gas extraction and result in hundreds of millions of tons of carbon pollution, based on Interior’s own estimates.

For Earthjustice, this represents a step backward from the White House’s stated plan to slash U.S. carbon pollution in half by 2030 and achieve net-zero carbon emissions by 2050. While explaining its rationale for the plan, the DOI cited the Inflation Reduction Act and the connection between offshore oil and gas leasing and renewable energy leasing. However, under Earthjustice’s analysis of the IRA, the Department of the Interior did not need to include more than a single oil and gas sale in the five-year program to allow for planned federal offshore wind leasing.

Abigail Dillen, Earthjustice President, underscored: “It’s very important that the Biden administration is scaling back plans for oil and gas leasing, and it’s essential to create the runway for a transition to offshore wind. But this five-year plan also represents a crucial missed opportunity to minimize future oil and gas drilling. We are too far along in the climate crisis to be committing ourselves to decades of new fossil fuel extraction, especially following the hottest summer in recorded history. 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.”

The worsening effects of climate change cost the U.S. government a record $23 billion so far. According to Earthjustice, oil production in the U.S. would be on track to reach an all-time high averaging 13.1 million barrels a day in 2024 even if the Biden administration had opted for zero lease sales. In the organization’s view, this is enough to keep America in its number one spot as the largest producer of global crude oil. While the U.S. already accounts for more than a third of the expansion of global oil and gas production planned by 2050, Earthjustice is convinced that scheduling new offshore oil and gas lease sales will not lower gas prices, increase jobs, or ramp up oil production for at least a decade.

In the meantime, oil and gas companies are already well-positioned to continue development far into the future, as they are in possession of more than 2,000 active leases that cover more than 12 million acres of offshore territory in the Gulf. Despite this, the environmental law charity points out that only about 25% of those active leases have started producing oil and gas, meaning the industry holds about 9 million acres that it could still develop. In recent years, each Gulf lease sale has offered up an average of 70 million acres, spanning virtually all unleased U.S. waters in the Gulf of Mexico.

Earthjustice is under the impression that the Biden administration’s five-year program will prolong “untenable” climate and environmental justice costs that Gulf communities have been made to bear for generations. The organization is convinced that Gulf ecosystems, which are perceived as “increasingly vulnerable” to human-caused climate change, will continue to be threatened by oil and gas operations that have “consistently caused grave harm” because of seismic activities, ship strikes, and numerous accidents, including the massive BP spill in 2010.

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With this at the forefront, climate activists are putting a lot of effort into making sure their voices are heard to put an end to the fossil fuels industry. Despite President Biden’s efforts to listen to the climate action lobby, Oceana has accused him of failing to deliver on his promise to end new offshore drilling in U.S. waters, even though by all accounts, this is the smallest number of offshore oil and gas lease sales ever recorded. The group claims that the new plan will expand offshore drilling in the Gulf of Mexico, covering an area that stretches from Texas to the Florida Panhandle.  

Beth Lowell, Oceana’s Vice President for the United States, condemned the new leasing program: “By failing to end new offshore drilling, President Biden missed an easy opportunity to do the right thing and deliver on climate for the American people. This decision is beyond disappointing, as Americans face the impacts of the growing climate crisis through more frequent and intense fires, droughts, hurricanes, and floods.

“President Biden is unfortunately showing the world that it’s okay to continue to prioritize polluters over real climate solutions. Expanding dirty and dangerous offshore drilling only exacerbates the climate catastrophe that is already at our doorstep. Unfortunately, it’s our coastal communities who will bear the immediate impact of this shortsighted decision.”  

Oceana’s 2021 analysis found that protecting all unleased federal waters from offshore drilling in the United States could prevent over 19 billion tons of greenhouse gas emissions, which is the equivalent of taking every car in the nation off the road for 15 years. The environmental group is adamant that ending new leasing could have also prevented more than $720 billion in damage to people, property, and the environment.  

“Every new drilling lease is a disaster waiting to happen. We know when companies drill, they spill, and offshore disasters impact communities, people, and businesses who rely upon a healthy ocean. Offshore drilling also fuels the climate crisis that will impact every single person living in the United States, but it will be low-income and marginalized groups who are disproportionately impacted. We can’t accept the consequences from President Biden’s failure to act. Congress must immediately reject this proposal during the review period and prevent all new leases on federal waters,” urged Lowell.

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While reactions to the new five-year offshore oil and gas leasing program highlight yet again the disparity between climate change campaigners and the oil and gas lobby, they also show Biden’s struggle to continue employing a semblance of a balancing act between the two opposing sides to ensure his green agenda will move ahead as planned while also addressing energy security concerns.

Most global organizations believe oil and gas are well-positioned to keep their spot in the future energy mix, although, the world appears to be divided on the further use of fossil fuels. While some are adamant that oil and natural gas are needed to fuel the energy mix for years to come, others are urging a swift phaseout of these sources and an accelerated switch to renewable energy.

Bearing in mind not only the reports that indicate that oil and natural gas, especially LNG, will continue to play an important role in America’s energy future but also the dichotomy between the demands from the fossil fuels lobby and climate action campaigners, Offshore Energy set up a poll on social media, inviting participants to weigh in on this by asking: Would the U.S. benefit from an energy strategy that features both natural gas and renewables as solutions for climate and energy challenges?

During the short span of time the poll was open, the landslide vote, or 84%, went to the first option, which said that a combination of natural gas and renewables would be needed to power the future. Meanwhile, 3% of the participants voted for an energy policy, that would throw away gas and focus exclusively on renewables while 13% cast their votes in favor of adding other energy sources to the mix.

The final results of this poll are in accordance with one of the previous polls Offshore Energy conducted at the start of 2023 along with views, cautioning against a premature phaseout of fossil fuels, especially gas, as it is believed that these will need to be burned a little longer alongside renewable energy to ensure the security of supply until all the pieces of the energy transition puzzle are in place for a pivot to a green, sustainable energy future.