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Biden Cancels More Oil Lease Sales While Prices At The Pump Soar

The Biden administration recently canceled the sale of several offshore oil and gas leases in the Gulf of Mexico and Alaska, leaving the oil industry justifiably concerned about the future of deepwater oil exploration and production in the United States.

These cancelations continue President Joe Biden’s mixed messaging about helping U.S. consumers facing skyrocketing gasoline prices, and America’s commitment to supplanting Russia as the primary energy supplier for Europe.

The lease sales were originally submitted by the Department of the Interior’s (DOI) Bureau of Ocean Energy Management under the 2017-2022 National Outer Continental Shelf Oil and Gas Leasing Program. This was meant to provide lease sales for bidding on areas not under moratorium, and was approved by President Barack Obama in 2017.

In an article titled “USA Lease Sale Cancellation Leaves Industry in Limbo,” Rigzone asked DOI for comment on why these lease sales were canceled. DOI responded, “Due to lack of industry interest in leasing in the area, the Department will not move forward with the proposed Cook Inlet OCS oil and gas lease sale 258. The Department also will not move forward with lease sales 259 and 261 in the Gulf of Mexico region, as a result of delays due to factors including conflicting court rulings that impacted work on these proposed lease sales.”

The court rulings referenced by DOI are most likely referring to those from June 2021 and January 2022. In the first decision, a Louisiana federal court found the Biden administration’s moratorium on Gulf of Mexico lease sales illegal. Thus, the court lifted the ban.

In the second decision, an activist federal judge blocked a large lease sale in the Gulf of Mexico, claiming that the emissions impact of the potential development were not properly accounted for. This is strange considering the law mandating regularly scheduled lease sales does not require the federal government to account for greenhouse gas emissions before putting leases up for sale.

Moreover, DOI also repeated a disingenuous claim that has become popular among the Biden crew that lease sales are unnecessary because many existing leases are going unused. Rigzone writes that DOI claims that “as of May 1, of the 10.9 million offshore acres under lease, the industry is not producing on 8.26 million acres, or 75.7%.”

This is a bizarre statement for supposed experts at DOI to make, implying that “non-producing” blocks are evidence that further lease sales are not needed.

Rigzone’s investigation into the reasons behind the non-producing leases are in line with what the Heartland Institute has previously reported: Companies invest in multiple leases that take years and tens of millions of dollars to explore for hydrocarbons; there is no guarantee that a lease block will have an economically viable quantity of oil or gas – dry holes are common; geologic maps and models are often incorrect, requiring companies to develop updated ones for the block before trying to drill a production well; securing a lease is one of the earliest stages of exploration; and obtaining the necessary permitting from government agencies and securing investments for the project typically takes years.

Concerning the latter point, while the Biden administration claims companies are currently sitting on 9,000 leases, the industry has submitted 4,000 drilling applications awaiting approval from the Biden administration. Yet, under Biden, permit approvals are at a virtual standstill.

It doesn’t matter if a company has paid exorbitant fees and secured a lease if the administration refuses to allow exploration.

Rigzone’s analysis concluded about half the leases cited by DOI are still in the earliest stages of exploration, which doesn’t jibe with DOI’s insinuation that the leases are simply not being used.

U.S. domestic energy production is needed to help balance the loss of Russian oil and gas from Europe and the United States – as described by Climate Realism here – in the wake of Russia’s invasion of Ukraine. The U.S. Energy Information Administration reports the Gulf of Mexico provides about 15% of total U.S. crude oil production.

According to Rigzone, the Biden administration’s incoherent, inconsistent energy policies are making it extremely difficult for oil companies to secure financing for those projects. No one wants to invest in a project that could suddenly be canceled with the stroke of the president’s pen – which Biden has repeatedly shown he is willing to do.

Despite Biden’s public pronouncements that he wants to help European and American drivers struggling to fill their gas tanks, his anti-fossil fuel policies are leaving oil and gas companies uncertain about how to proceed with much-needed projects. As production naturally declines from older wells, new ones will be needed to pick up the slack. If nothing replaces them, the United States and its allies will be in the midst of a much worse energy crisis than we are already facing.

Linnea Lueken (llueken@heartland.org) is a research fellow with the Arthur B. Robinson Center on Climate and Environmental Policy at the Heartland Institute, a nonpartisan, nonprofit research center headquartered in Arlington Heights, Illinois.

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2 comments

  • In 2014, the Biden Admin asked sympathetic bankers to shift oil and gas lending to Green Energy and Save the Planet. Since then, O&G investment has dropped 50%. You cannot drill without $.

    As an unintended consequence, natural gas prices increased to a point where fertilizer plants across the globe were shuttered. And now, without fossil fuel fertilizer, we are facing the largest Starvation Event in human history.

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