Biden Issues Offshore Drilling Rights Under Climate Mandate

By Bloomberg

Sep 14, 2022

image is BloomburgMedia_RI79SWDWLU6801_14-09-2022_20-00-13_637987104000000000.jpg

Pipes and mooring lines are seen beneath the Chevron Corp. Jack/St. Malo deepwater oil platform in the Gulf of Mexico off the coast of Louisiana, U.S., on Friday, May 18, 2018. While U.S. shale production has been dominating markets, a quiet revolution has been taking place offshore. The combination of new technology and smarter design will end much of the overspending that's made large troves of subsea oil barely profitable to produce, industry executives say. Photographer: Luke Sharrett/Bloomberg

(Bloomberg) -- The Biden administration on Wednesday issued oil and natural gas leases to companies that nabbed the Gulf of Mexico drilling rights in a government auction later invalidated by a federal court.

The Interior Department’s Bureau of Ocean Energy Management said it had accepted 307 winning bids from that November 2021 sale, dispelling lingering uncertainty about how the agency would comply with a mandate in the sweeping new climate law that required the lease awards.

The move comes at a pivotal time for the White House, as President Joe Biden seeks to intensify the fight against climate change while also combating record inflation fed by high energy costs. Top Biden administration officials have exhorted oil companies to produce more crude and refine more gasoline in a bid to lower fuel costs.

The bureau stressed that it was complying with the law but simultaneously seeking to minimize environmental impacts of any drilling and oil production from the newly awarded leases.

“Leases resulting from this sale include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species and avoid potential ocean user conflicts,” the bureau said in an emailed statement.

Oil companies spent some $190 million buying leases in the Gulf sale last November. But just three months later, a Washington-based federal district judge tossed out the auction, after finding the Interior Department hadn’t sufficiently analyzed the climate change impacts of the sale.

Under a provision tucked into the just-enacted Inflation Reduction Act, the Interior Department was required to award those leases. Future oil lease sales are also required for the agency to issue rights of way and leases to renewable projects on federal lands and waters.

The Inflation Reduction Act will “enable the Interior Department to continue playing a leading role in the transition to a clean energy economy,” the ocean energy bureau said. “We are committed to implementing the law, including direction regarding the federal oil and gas programs.”

(Updates with comment from Interior Department from fourth paragraph)

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By Jennifer A. Dlouhy