A supply ship moored next to Chevron Jack/St. The Malo deep-water oil rig in the Gulf of Mexico is pictured in an aerial photograph off the coast of Louisiana, U.S., on Friday, May 18, 2018.
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A supply ship moored next to Chevron Jack/St. The Malo deep-water oil rig in the Gulf of Mexico is pictured in an aerial photograph off the coast of Louisiana, U.S., on Friday, May 18, 2018.
Bloomberg / Bloomberg via Getty Images
Days after President Joe Biden told world leaders his administration is committed to slowing climate change with “actions, not words,” his Interior Department oversees one of largest oil and gas lease in US history.
Eighty million acres of the Gulf of Mexico – an area twice the size of Florida – were put on Wednesday’s auction block. The energy companies, led by Exxon Mobil Corp., only bid on a total of 1.7 million acres and it is unclear what percentage of that will be developed later.
Environmentalists have criticized the rental auction. “This is an administration that has campaigned to deal with climate change,” said Drew Caputo, an attorney at Earthjustice. “That’s why this lease sale is so disappointing, because it’s the most important action the administration will take on oil and gas development, and it’s gone in the wrong direction.”
The Biden administration argues that it doesn’t have many options. Immediately after taking office, Biden announced suspend new oil and gas rental on federal lands and waters, pending consideration of their impact on the deepening climate crisis. About a quarter of US greenhouse gas emissions come from fossil fuel extraction from public lands.
More than a dozen Republican-led states have filed lawsuits challenging the halt, saying it would unduly harm the energy industry and state economies that depend on fossil fuel production.
Earlier this summer, a federal judge in Louisiana sided with those states, issuing a preliminary nationwide order. The Biden administration is appealing that decision, but is agreeing to resume rental sales in the interim. Additional rental sales are planned in Wyoming, Colorado, Montana and other western states early next year.
Hilary Tompkins, an environmental attorney at Hogan Lovells who served as an attorney for the Obama Department of the Interior.
Environmental groups say there’s more than Biden could have done to stop the trade, if he was serious about shifting the US economy away from fossil fuels.
The Justice Department may have applied for an emergency order to suspend the lease while the administration’s suspension of oil and gas leases is being appealed. It could also be argued that the environmental risks associated with rental sales conflict with the National Environmental Protection Act.
Both will come with legal and political risks, says Tompkins.
“The legislation is pretty clear,” said Erik Milito, president of the National Oceanic Industry Association, a trade group for offshore energy companies. “The law requires the Home Office to have a rental program and it has to maintain that rental program, so it’s hard for the Home Office to cancel a rental sale without a sound basis.”
In addition, he said, an intervention to stop rental sales would have a serious impact on the country’s oil and gas industry.
One analysis published in August by the Institute for Conservation Economics, commissioned by the Natural Resources Defense Council and other conservation-based nonprofits, suggests that the pause on oil and gas leases on land will have a “negligible” economic impact in the short term.
Oil and gas companies have hoarded leases during the tenure of former President Donald Trump. According to the analysis, more than half of the land leased by energy companies is currently not producing, “indicating a declining economic need for federal leases.”
The sale of the existing lease is different, says Milito.
“The production levels are almost at the highest level we have ever seen in the Gulf of Mexico and we see the Gulf as one of the most attractive basins in terms of oil and gas exploration prospects in the world,” he said.
Energy prices are soaring as economies around the world recover from the COVID-19 pandemic. Republican lawmakers and fossil fuel companies were quick to point to the Biden administration’s climate policy cause and claim rental sales like those in the Bay Area could drive down prices.
In fact, oil prices are global and are often determined by the amount of crude that the Organization of the Petroleum Exporting Countries (OPEC) sells on the market. It will take years for the contracts to be auctioned off on Wednesday for oil production, and challenges from environmental groups are expected.
“It simply doesn’t make sense to place corporate profits,” said Christy Goldfuss, senior vice president of energy and environmental policy at the Center for American Progress, a liberal think-tank. oil on the future of a habitable planet. “The Biden administration must control the federal rental program with its existing authority to deliver on its promise to current and future communities across America. We cannot accept that approach. fraught with risk, harm, and inconsistency to the governance of America’s public lands and oceans.”
