Govt reinstates largest offshore oil & gas lease sale in U.S. history
Thanks to the provisions stipulated within a new energy bill, which Biden signed into law last month, the Bureau of Ocean Energy Management (BOEM), a U.S. government agency, has reinstated the first oil and gas lease sale, held under the Biden administration, for acreage in federal waters in the Gulf of Mexico.
Back in November 2021, the largest offshore oil and gas lease sale in U.S. history and the first under the Biden administration was held by the Interior Department, resulting in more than $191 million in high bids for 308 tracts covering 1.7 million acres. Come January 2022, the results of this sale were invalidated by a U.S. judge on the grounds of failure to properly account for the lease sale’s climate change impact.
This decision was hailed as a pivotal victory in the fight to defend Gulf communities and the planet from the worsening climate crisis by environmental groups, however, the American Petroleum Institute (API), was disappointed with the decision and filed a notice of appeal in February 2022.
A few months later, the Inflation Reduction Act (IRA) of 2022, which President Joe Biden signed into law in August 2022, outlined that it would reinstate the vacated Gulf of Mexico Lease Sale 257 and hold the cancelled Lease Sales 258, 259, and 261.
In an update on Wednesday, BOEM disclosed that it had accepted 307 highest valid bids from the Lease Sale 257 in the Gulf of Mexico, totalling $189,888,271, in compliance with congressional direction in the Inflation Reduction Act.
Moreover, leases resulting from Lease Sale 257 include stipulations to “protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential ocean user conflicts.”
This lease sale offered approximately 15,148 unleased blocks located from 3 to 231 miles offshore, in the Gulf’s Western, Central and Eastern Planning Areas in water depths ranging from 9 to more than 11,115 feet (3 to 3,400 meters).
BOEM described the IRA as “a historic and transformational investment toward achieving President Biden’s ambitious goals to tackle the climate crisis while lowering costs for working families and creating good-paying jobs.”
Furthermore, this bill will enable the Interior Department to “continue playing a leading role” in the transition to a clean energy economy. BOEM claims that it is “committed to implementing the law,” including direction regarding the federal oil and gas programmes.
In early August, the American Petroleum Institute pointed out that the bill could open the door to more federal onshore and offshore lease sales and expand credits for carbon capture, but added that policies that raise taxes and discourage ongoing investment in U.S. oil and natural gas were “ill-advised.”
Keeping energy security at the forefront, API called for a ramp-up of the U.S. oil and gas production earlier this month not only as a solution to the energy security concerns plaguing the world at large but also as an enabler of the energy transition, helping to accelerate renewable and low-carbon developments.
In addition, the American Petroleum Institute called for a permitting reform, and a finalised five-year federal offshore leasing programme to help ensure safe and long-term production off America’s shores.