Just Three: Industry Decries Meager Offshore Oil, Gas Leasing Plan

Future offshore leasing opportunities will be few and far between under the Biden administration’s proposed 2024–2029 National Outer Continental Shelf (OCS) Oil and Gas Leasing Program.

On Sept. 29, the Department of the Interior (DOI) released the Proposed Final Program and Final Programmatic Environmental Impact Statement (EIS) for the next five-year leasing program, which contained only three lease sales—all in the Gulf of Mexico (GoM). Industry groups immediately railed against the pared-down offering, while environmentalists opposed any new lease sales.

The most recent version of the five-year leasing plan ties offshore wind lease sales together with GoM oil and gas lease sales in 2025, 2027 and 2029.

2022’s Inflation Reduction Act (IRA) stipulates that the Bureau of Ocean Energy Management (BOEM) can only issue a lease for offshore wind development if in the previous year the agency offered at least 60 million acres for oil and gas leasing on the OCS. Without federal oil and gas leasing, offshore wind is also hogtied.

Secretary of the Interior Deb Haaland said in a press release that the proposed final program “represents the smallest number of oil and gas lease sales in history.”

The five-year OCS program proposed in July 2022 stated that between zero and 11 lease sales were possible. That plan was delayed and ultimately released the day after the previous five-year plan ended. The version proposed in July was met with industry concerns, culminating in an October 2022 call from industry leaders urging the Biden administration to quickly approve all 11 potential offshore lease sales due to concerns about energy security, reliability and affordability.

According to the DOI, more than 760,000 comments were made regarding the Proposed Program and Draft Programmatic EIS released in July 2022.

Industry outcry

In response to the Sept. 29 unveiling of the final proposed OCS leasing program, American Petroleum Institute President and CEO Mike Sommers criticized the Biden administration’s energy policies, saying they come at a time of “rampant” inflation in the country. 

“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,” he said in a press release. “For decades, we’ve strived for energy security and this administration keeps trying to give it away.”

National Ocean Industries Association President Erik Milito called the proposed program an “utter failure” for the country in a press release and said the White House is ignoring energy reality while limiting U.S. energy production opportunities. He further called out the Biden administration for the delay in releasing the plan and how it handles environmental analyses for the sales. 

“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,” he said. “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.”

Milito also expressed concern that limits on offshore development would result in increased reliance on energy imports 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," he said.

Louisiana Oil & Gas Association President Mike Moncla said the Biden administration’s war on the oil and gas industry continues to rage on. With only three offshore lease sales committed to in the coming years, he said, discoveries will be curtailed for years to come. 

He said the program will diminish Gulf of Mexico Energy Security Act funds meant to rebuild the coast. 

“The Gulf of Mexico provides 15% of our nation’s oil. These attempts to slow or halt offshore production hurts all Americans at the pump, and makes us more dependent on foreign oil,” he said. “The reality is that worldwide demand for oil and gas is at record levels and our products will continue to be necessary for decades to come."

U.S. Senator Joe Manchin (D-WV), chairman of the Senate Energy and Natural Resources Committee, also expressed concern about the proposed leasing plan while also acknowledging that “three lease sales is more than the zero,” a possibility that may have occurred without passage of the IRA.

“It’s now clear without a shadow of a doubt that without the IRA, this administration would have ended federal oil and gas development completely,” he said in a press release. “Granting the bare minimum of oil and gas leases will result in a minimum of renewables leases as well because the IRA tied the two together. You can’t have one without the other.” 

Source of contention

Lease sales have been a source of contention during the Biden administration. In addition to allowing the 2017-2022 OCS Oil and Gas Leasing Program to close without having the next five-year leasing program in place, the last three sales included in the 2017-2022 plan—GoM Lease Sales 259 and 261 and the Cook Inlet Lease Sale 258—were canceled. The DOI cited a lack of interest in the Cook Inlet cancellation. A court vacated GoM lease sales in November 2021, although the leases were ultimately awarded.

More recently, Lease Sale 261 in the GoM also made headlines. It was originally slated for Sept. 27 to meet the IRA’s Sept. 30 deadline for holding the sale. Following a legal challenge,  the Fifth U.S. Circuit Court of Appeals in New Orleans ordered the sale to proceed

by Nov. 8. According to a document scheduled to be published in the Federal Register on Oct. 2, the BOEM will open bids for Lease Sale 261 on Nov. 8. The new final notice of sale package will be available on the BOEM’s website at least 30 days before the new sale date.

The 2024-2029 plan’s next steps

While the DOI released the proposed final program on Sept. 29, the program and associated EIS are not scheduled to publish in the Federal Register until Oct. 2, which triggers a 60-day waiting period before the Haaland can approve and finalize the program.

Also on Oct. 2, the BOEM’s call for information and nominations for the lease sales will be published in the Federal Register. That begins a 30-day comment period.