President Biden took a step Wednesday toward fulfilling a major campaign promise by imposing a pause on new oil and gas leasing on federal lands and waters.
The move sets up a major conflict with the oil and gas industry that has been wounded from the coronavirus pandemic but was expecting demand for fuels to rebound. But Biden is pleasing climate change activists who pressured him to begin aggressively moving the country off fossil fuels.
Biden’s action goes further than an order issued by the Interior Department last week to stop giving new leases for fossil fuel production on federal lands or waters for at least 60 days unless top political appointees approve it.
His new executive order stops leasing for an indefinite period while the administration reviews whether, and under what conditions, oil and gas development could resume beyond that period under the federal minerals leasing program. It directs the secretary of the Interior Department to launch a review of all existing leasing and permitting practices for fossil fuel development on public lands and waters and to identify steps to double energy production from offshore wind by 2030. The order exempts Native American tribes, which control about 20% of known oil and gas reserves on federal lands.
It does not affect existing oil and gas leases, which can last for up to 10 years, meaning drilling can continue on federal land in the West as well as the Gulf of Mexico, which stand to be most affected. During the end of the Trump administration, some larger companies rushed to stash permits on leases so they could continue operating.
Democrats and environmentalists say that addressing greenhouse gas emissions on public lands represents a significant piece of the puzzle in mitigating climate change despite the fact that most oil and gas drilling occurs on private property.
Nearly a quarter of U.S. greenhouse gas emissions come from energy production on public lands and waters, the U.S. Geological Survey found in 2018.
“The obvious place to start the transition off fossil fuels is to stop new leasing,” Democratic Rep. Jared Huffman of California recently told the Washington Examiner. “If you continue with the leasing, there won’t be any transition, and it’s just business as usual.”
Critics argue targeting fossil fuel production on public land would not significantly decrease emissions because if demand for oil and gas rebounds after the pandemic, production could move to other areas of the U.S. or to countries with less cumbersome regulations.
For example, while most of the Permian Basin, the world’s biggest oil field, exists on private land in West Texas, some of it spills over to public land in New Mexico, the state with the nation’s most oil production on federal lands. So producers could just shift over the border to Texas.
“Even if you do a moratorium on drilling on federal land, demand for oil will come from somewhere,” said Arvind Ravikumar, an assistant professor of energy engineering at the Harrisburg University of Science and Technology. “Overall, it might not have a lot of impact directly on emissions in the near-term.”
Ravikumar, however, said Biden’s action sends a market signal that could make it harder for oil and gas producers to acquire financing, making drilling more expensive over time and leading to long-term U.S. emissions reductions. The order suggests it will be more challenging to expand fossil fuel production on federal lands due to likely tougher permitting requirements, methane restrictions, and possible carbon regulations.
About 22% of total U.S. oil production and 12% of natural gas output occurred on federal lands and offshore waters in 2019, according to the American Petroleum Institute, the largest U.S. oil and gas lobby.
The oil and gas industry and allied business groups say leasing restrictions would harm states with large portions of public land that earn royalty payments from federal drilling.
New Mexico, a key Democratic state and the home of Biden’s Interior secretary nominee, Deb Haaland, was the top recipient of federal energy revenues in 2019, accounting for $800 million of the state’s budget.
“It’s never a good time to ramp down domestic energy production, but right now, in the middle of a pandemic, when our nation is in desperate need of economic recovery, it’s particularly bad,” said Marty Durbin, president of the U.S. Chamber of Commerce’s Global Energy Institute, in a call with the press. “Once production is ramped down, there is no guarantee it will come back.”
Biden is also expanding his leasing moratorium to offshore federal waters, where nearly all oil and gas development occurs in the western and central portions of the Gulf of Mexico.
Erik Milito, president of the National Ocean Industries Association, a lobbying group for offshore drillers, said restricting leasing opportunities would raise prices for gasoline and shift production to the Mexican side of the Gulf and potentially to other countries.
Milito said offshore drilling, while expensive, is more productive on a per-well basis compared to onshore shale production and that development in the deep waters of the Gulf of Mexico has the lowest greenhouse gas emissions of any source of oil and gas production.
He said offshore development would face a greater risk than onshore because nearly all of it occurs in federally governed waters.
“It would be devastating to see restrictions placed on that,” Milito told the Washington Examiner. “These are legitimate jobs linked to a niche industry that will in many respects go away.”
The federal government enjoys broad discretion in managing public land, with the Interior secretary able to emphasize conservation or renewable energy development instead of oil and gas leasing.
But Biden could still face legal challenges from fossil fuel groups that argue federal laws mandate the government offer federal land for oil and gas leasing if companies are interested.
