Biden administration plans record-low number of offshore drilling leases

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The Biden administration on Friday unveiled plans to hold a record low number of offshore lease sales over the next five years, in a blow to the oil and gas industry.  

Just three lease sales are planned in the Gulf of Mexico from 2025 to 2029 under the final terms of a government programme, which was delayed for months amid bitter debate between climate and fossil fuel groups.

The lease sales are significantly lower than the Donald Trump administration’s original proposal that planned up to 47 lease sales, which would have opened up nearly all of the US coast for drilling.

The restrictions disappointed the oil and gas sector, which has lobbied hard to gain greater access to the Gulf of Mexico — an area that provides about 15 per cent of total US crude oil production.

“This restrictive offshore leasing programme is the latest tactic in a co-ordinated strategy to reduce energy production,” said Mike Sommers, chief executive of the American Petroleum Institute, an industry group.

“[This is] ultimately weakening America’s energy dominance, limiting consumers’ access to affordable reliable energy and compromising our ability to lead on the global stage.”

But the plan to hold any oil and gas lease sales at all was also slammed by environmental campaigners, who called it a “missed opportunity” to minimise future drilling.

Earthjustice, a climate group that has previously sued the Biden administration for a lease sale in the Gulf of Mexico, said it would continue to work with Gulf coast communities to challenge new leasing and “a fossil fuel economy that is poisoning people and driving climate change”.

The White House said the three proposed lease sales were compliant with the provisions of the Inflation Reduction Act, the landmark climate law that tied offshore wind leasing to offshore oil and gas development.

The IRA does not allow the Bureau of Ocean Energy Management to issue a lease for offshore wind development unless the agency has offered at least 60mn acres for oil and gas leasing in the previous year.

Publication of the plan by the Department of the Interior comes as President Joe Biden walks a tightrope on climate action and energy security, passing aggressive climate policies while trying to keep a lid on rising petrol prices.

This month, six congressional Democrats wrote a letter to the White House urging the administration to issue no new lease sales.

“We cannot drill our way to a safe climate, healthy environment and thriving economy,” the lawmakers wrote, adding energy security concerns “will not be fixed by introducing new leases”.

Analysts are sceptical that the five-year plan will have much of an impact on US oil production. Offshore leases do not guarantee oil discovery and can take up to 10 years to explore and develop.

“Even if they were the most oil and gas friendly administration in the world, these sales wouldn’t specifically have much impact on production,” said Hunter Kornfeind, oil market analyst at Rapidan Energy Group, calling the fears of production impacts “overblown”.

US oil production is predicted to reach an all-time high this year as more efficient shale extraction techniques propel output to 13mn barrels a day despite limited investments from companies.

Biden had promised no new oil and gas leasing on federal lands as president, signing an executive order in his first month of office to pause new sales. This was struck down by a federal judge months later.