Biden Held a Lease Sale - Should We Celebrate?

Barely a week after its representatives committed the United States to a COP28 agreement pledging to “transition away” from fossil fuels – oil, natural gas, and coal – the Biden government held its first significant auction of offshore leases in the Gulf of Mexico Wednesday. It was not just any old lease sale, mind you, but the most massive one since 2015 with more than 72 million acres up for lease.

The Bureau of Ocean Energy Management (BOEM) reports that the government collected a total of $382 million in lease bonuses from an array of “big oil” companies, including Chevron, Shell, Hess (soon to become Chevron via merger), Anadarko (already a part of Oxy via a 2019 merger), Equinor, and Repsol. Obviously, the Biden administration’s long refusal to hold a real lease sale in the Gulf had resulted in a pent-up demand for new development acreage among the large, well-capitalized companies that are capable of investing billions of dollars in exploration for new deep-sea resources.

In a statement, Erik Milito, President of the National Ocean Industries Association (NOIA), emphasized the importance of maintaining an active program for offshore lease sales in U.S. waters. "Today signifies a critical point in American energy policy,” Milito said. “The U.S. offshore oil and gas industry is stepping up and making the investments vital to enhance our energy, economic, and national security for decades to come. However, the offshore industry’s commitment to American energy security and affordability comes at a time of significant and unnecessary uncertainty. Without Congressional intervention, this is the final lease sale until at least 2025.”

2025, of course, will be the year in which the next presidential administration begins. If it is a continuation of the Biden presidency – or that of another Democrat – then we can anticipate the new 5-year plan for offshore leasing introduced December 15 will reign. That plan envisions the holding of just 3 offshore lease sales from 2024 through 2029. That is fewer sales than Barack Obama’s administration held in any single year, and a tiny fraction of the 47 sales envisioned by the 5-year plan adopted during the Trump administration.