The Future of U.S. Offshore Oil Drilling is in Balance
The Biden Administration is completing the next five-year offshore lease program. This delay has been in place for several months. This creates more uncertainty for the U.S. Oil Industry, which has struggled with mixed messages from Washington ever since President Biden was elected.
In June 2022, the previous five-year program was terminated. The Biden Administration hasn’t yet published a final version of the 2023-2028 program, as it looks to balance between climate goals and the need to ensure some continued production activity in the largest U.S. offshore basin, the Gulf of Mexico, in a world where domestic energy resources are the best energy security tool a country could have.
The Administration has been criticised by the oil industry for delaying the program. They are also concerned about the possibility that environmental voices will prevail and limit offshore leasing sales to the Gulf of Mexico.
Gulf of Mexico is Important for U.S. Energy Security
The Gulf of Mexico is America’s primary offshore source of oil and gas, generating about 97% All U.S. oil and gas production Outer Continental Shelf. Federal offshore oil production from the Gulf of Mexico accounts for 15% of total U.S crude oil production. Federal offshore natural gas production from the Gulf accounts to 5% of total U.S dry production. estimates The Energy Information Administration, (EIA) Additionally, approximately 47% of U.S. crude oil refining capacity and 51% of U.S. natural-gas processing plant capacity are located along the U.S. Gulf Coast.
Related: U.S. House Passes Bill Keeping China From Purchasing Oil From SPR
The Gulf of Mexico, therefore, is very important for the U.S. – and global – energy supply. Some companies may reconsider their plans to locate the primary U.S. offshore oil & gas location due to uncertainty over future lease sales or developments.
Administration defers five-year program decisions
Still, the Biden administration is delaying the completion of the 2023-2028 programme. Most likely, the White House is considering how to reconcile the environmental and climate concerns of the “keep it in the ground” camp with the need to have homegrown energy resources to protect energy and national security, according to analysts.
According to Kevin Book, ClearView Energy Partners managing director, the White House is likely trying to balance an equation about how much oil it would need to lease in order to meet climate and clean energy goals. E&E News’ Heather Richard.
A five-year plan must be published by the Administration as required by law. In the first plan for the new program, the Department of the Interior’s proposal “puts forward several options from no lease sales up to 11 lease sales over the next five years.” The plan removed from consideration the federal waters off the Atlantic and Pacific coasts while inviting public comment on 10 potential sales in the Gulf of Mexico and one in the Cook Inlet off south-central Alaska.
This week, the Bureau of Ocean Energy Management is (BOEM). issued Its Final Supplemental Environmental Impact Statement, (EIS), for two upcoming Gulf of Mexico Outer Continental Shelf oil & gas lease sales, Lease Sale 259 et Lease Sale 261, in compliance with the Inflation Reduction Act of 2020. Lease Sale 259 is to be held no later that March 31, 2023. Lease Sale 261 must be held no later then September 30, 2023.
President Biden, who campaigned on promises to end federal lease sales onshore and offshore, said, “No more drilling…there is no more drilling,” at a campaign rally in New York state just ahead of the mid-term elections in November when asked by a person in the crowd about drilling on federal land and in federal waters.
U.S. Oil & Gas Industry Calls For Clarity and Permitting Overhaul
The U.S. oil and gas industry is continuously calling for more clarity on future lease sales and for the Administration to stop frustrating the sector’s efforts to supply more American oil and gas resources instead of the U.S. having to rely on imports from countries like Saudi Arabia or Iraq, which have lower environmental standards in energy production than the U.S.
The American Petroleum Institute (API), along with more than 80 trade groups, took over the five-year old offshore leasing program just before it expired in June 2022. wrote a letter To President Biden, to urge the Administration to implement a five-year new program as soon as possible.
“If the door closes to new U.S. production, investment dollars will instead flow abroad to more active basins to the detriment of American workers, energy consumers, and the environment,” they said.
In a report published this week, API said that “through the Biden administration’s first 19 months in office, the U.S. Interior Department (DOI) leased fewer acres for drilling on federal lands and waters than any other administration in its first 19 months since the end of World War II, when the U.S. economy was a tiny fraction of what it is today.”
“DOI must issue a robust, final, five-year offshore leasing program for oil and natural gas that includes multiple leasing opportunities,” API said.
The top U.S. oil lobbying group also called for reforming the permitting process for energy infrastructure – “Congress should authorize major energy infrastructure projects as critical to the national interest, supporting energy production, processing and delivery.”
By Tsvetana Paraskova for Oilprice.com
Oilprice.com offers more top-rated reads