The Interior Department is proposing to sell new oil and gas leasing rights in the Gulf of Mexico, the first in a series of three previously canceled lease sales ordered to be held by the recently-passed Inflation Reduction Act.
Interior’s Bureau of Ocean Energy Management announced a proposed notice of sale Thursday for Lease Sale 259, which will be held in March 2023. It will be the first offshore lease sale to be held since November 2021 and would be the first to include the higher royalty rates enacted into law by the Inflation Reduction Act.
DEMOCRATS’ MAJOR CLIMATE BILL HAS RESURRECTED FEDERAL OIL AND GAS LEASING
Democrats and the Biden administration sought higher royalties, monies paid to government on extracted oil and gas, on leased parcels as part of a larger effort to reform the oil and gas leasing programs and ensure a “fairer return” to taxpayers for leased acreage.
The Inflation Reduction Act, the new green energy and healthcare spending law Democrats passed in August, included language negotiated by centrist Sen. Joe Manchin (D-WV) ordering the Interior Department to hold 259 and two other lease sales — one other in the Gulf and one in Alaska’s Cook Inlet. All three lease sales were canceled in May and would not otherwise have been held, because they were contemplated in the 2017-2022 five-year offshore leasing program, which expired in June.
The Inflation Reduction Act ordered Interior to hold Lease Sale 259 by the end of March 2023, while 261, the other Gulf sale, must be held by the end of next September. Lease Sale 258 in Cook Inlet must be held by December of this year under the law but has yet to be scheduled.
<mediadc-video-embed data-state="{"cms.site.owner":{"_ref":"00000161-3486-d333-a9e9-76c6fbf30000","_type":"00000161-3461-dd66-ab67-fd6b93390000"},"cms.content.publishDate":1666291239773,"cms.content.publishUser":{"_ref":"00000172-336d-d668-a372-3bef83ff0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"cms.content.updateDate":1666291239773,"cms.content.updateUser":{"_ref":"00000172-336d-d668-a372-3bef83ff0002","_type":"00000161-3461-dd66-ab67-fd6b933a0007"},"rawHtml":"
var _bp = _bp||[]; _bp.push({ "div": "Brid_66291233", "obj": {"id":"27789","width":"16","height":"9","video":"1121088"} }); ","_id":"00000183-f6b2-d5ff-a7af-feff84cb0000","_type":"2f5a8339-a89a-3738-9cd2-3ddf0c8da574"}”>Video EmbedIn addition to the Gulf notice of sale, BOEM announced the completion of its environmental review for the Cook Inlet sale on Thursday.
BOEM’s emphasized Thursday that its proposed notice of sale and environmental review were issued to comply with the instructions in the new law.
Thursday’s announcement was a win for the oil and gas industry, which has taken the Biden administration to court over its implementation of the oil and gas leasing programs, including its delayed publication of a new five-year offshore leasing program.
Interior belatedly issued a proposed five-year program for years covering 2023-2028 back in July. The program lays out a list of all potential oil and gas lease sales in the Outer Continental Shelf covering a five-year period.
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President Joe Biden entered office on promises to restrict oil and gas leasing and drilling on federal lands and in federal waters. He ordered a “pause” on all new leasing in January 2021, although that order was subsequently preliminary enjoined by a federal court.
The administration responded by moving forward with one offshore lease sale in November 2021. It subsequently carried out one series of onshore lease sales covering acreage in multiple Western states over the summer.
Biden’s environmental constituencies, who favor no new leasing, have been disenchanted by the lease sales and argue that Interior has legal discretion to cease leasing new acreage.
