Biden plan could allow new offshore drilling in Gulf of Mexico

Unused oil rigs sit in the Gulf of Mexico. (Credit: REUTERS/Lee Celano)

This article originally appeared on Inside Climate News. It is republished with permission. Sign up for their newsletter here.

This week, the Biden administration took two of its biggest steps yet to open public lands to fossil fuel development, holding its first onshore lease sales and releasing a proposed plan for offshore drilling that could open parts of the Gulf of Mexico and Alaska’s Cook Inlet to leasing through 2028.

The moves run counter to President Biden’s campaign pledge to halt new oil and gas development on federal lands and waters, and come as the president is under mounting political pressure to address high energy prices.

Biden faces a range of conflicting interests on climate change, energy and the economy as he tries to lower gasoline prices and increase energy exports to counter Russia’s dominance of western European energy, all without abandoning the ambitious climate agenda he brought to the White House. On Thursday, the Supreme Court dealt another blow to that agenda with a 6-3 decision that restricted the Environmental Protection Agency’s ability to curb climate pollution from the power sector.

The Bureau of Land Management was also expected to release a new environmental impact statement for a major oil development proposed in the Alaskan Arctic this week, but the report was not public at the time of publication. That statement could amount to an endorsement for decades of future production from a sensitive and rapidly warming habitat.

“It is definitely a week that I would say calls into question Biden’s commitment to climate change,” said Nicole Ghio, fossil fuels program manager at Friends of the Earth, an advocacy group.

For many climate advocates, the new oil and gas leasing comes as a bitter disappointment, particularly because any new oil production will take years and is therefore highly unlikely to alleviate current high energy prices. Instead, advocates say, all the leasing will do is lock in additional oil and gas production years from now, when the nation’s climate targets dictate that oil and gas use should be on the decline.

“It is impossible to fight climate change if we continue to lease public lands and waters to fossil fuels,” Ghio said. “We cannot meet our international commitments, we cannot keep stable to 1.5 degrees (Celsius),” a level of warming beyond which climate impacts are likely to grow far worse, scientists say.

The proposed five-year program was the next step in a process begun by the Trump administration, which had initially considered opening areas off the Atlantic and Pacific coasts but faced enormous opposition from coastal states. Friday’s plan proposed offering leases in areas that already generate the vast majority of offshore oil production, but the department included a range of options to consider in the final plan after an extensive comment period, including not opening any areas to leasing. Areas off the Atlantic or Pacific coasts would remain off-limits in all the options.

The onshore leases, which were the first issued since Biden took office, opened more than 120,000 acres across the West to new oil and gas development. That was only a fraction of what oil companies had asked for, and the leases will come with a new, higher royalty rate that drillers will pay for any fossil fuels they extract. The vast majority of that acreage was in Wyoming, and oil companies ended up leasing only about 60 percent of the total available, according to the Center for Western Priorities, an environmental group.

Environmentalists have already filed lawsuits challenging the new leasing.

In a statement accompanying the release of the offshore leasing plan, Interior Secretary Deb Haaland said the areas offered were similar to those in the previous program, which was finalized by the Obama administration, and she stressed that the proposal was not yet final.

“From Day One, President Biden and I have made clear our commitment to transition to a clean energy economy,” she said. “Today, we put forward an opportunity for the American people to consider and provide input on the future of offshore oil and gas leasing. The time for the public to weigh in on our future is now.”

The department will hold a 90-day public comment period before it begins considering its final plan.

An Interior Department spokeswoman declined to answer questions about the onshore lease sales, pointing instead to a press release from when they were announced in April. The decision to open those lands came after a federal judge struck down a moratorium on leasing that the administration had imposed in January 2021. The release noted that in addition to the higher royalty rate—18.75 percent instead of 12.5 percent—the leases were restricted to areas near existing development and pipelines.

“For too long, the federal oil and gas leasing programs have prioritized the wants of extractive industries above local communities, the natural environment, the impact on our air and water, the needs of Tribal Nations, and, moreover, other uses of our shared public lands,” Haaland said in the statement. “Today, we begin to reset how and what we consider to be the highest and best use of Americans’ resources for the benefit of all current and future generations.”

Oil industry groups criticized the offshore drilling proposal for even considering an option that would exclude drilling.

“At a time when Americans are facing record high energy costs and the world is seeking American energy leadership, tonight’s announcement leaves open the possibility of no new offshore lease sales,” said Frank Macchiarola, senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute, in a statement.

Ben Cahill, a senior fellow at the Center for Strategic and International Studies, said that even though new leasing won’t help lower energy prices anytime soon, the Biden administration could use it as part of a broader, strategic effort to push his climate agenda. The pandemic and efforts to wean Europe off Russian oil and gas have created an energy supply crunch that could last years, he said, bolstering the argument that U.S. fossil fuel production can play an important role in global energy security. He said the Biden administration needs to support oil production in the short-term while also pushing policies that will reduce fossil fuel demand.

“Let’s talk about what we need to do to support more short-term fossil fuel production,” he said. “But can we also use this to unlock an opportunity to get climate policy moving and take a lot of the things that were in Build Back Better—the support for EV adoption, the tax credits for clean energy—and make that happen? I mean, it’s urgent to do both.”

Some environmental advocates say the Biden administration deserves credit for limiting the scope of onshore development and for the higher royalty rates. Given the political pressures and the court ruling against the leasing moratorium, the Biden administration’s options were limited, said Josh Axelrod, a senior advocate in the nature program at the Natural Resources Defense Council.

“It would have been nice to see the administration really stick to its position and fight for the moratorium,” Axelrod said, “but politics and global affairs also have interfered and that puts them in a tough situation.”

New Leases Won’t Affect Current Prices at the Pump

The oil industry and Republicans have been hammering Biden for months, using rising energy prices and the war in Ukraine to argue that he should loosen environmental restrictions on fossil fuel development. Energy Secretary Jennifer Granholm has also called on oil companies to expand production to help lower prices, even as Biden has criticized the industry for reaping huge profits during a crisis.

In recent weeks, Chevron’s Chief Executive Mike Wirth and the American Petroleum Institute sent open letters to Biden calling on him to work with the industry and to open access to public lands for drilling. The tension culminated in a meeting last week between Granholm and oil executives.

Energy prices have spiked largely because of the ripple effects from pandemic lockdowns and Russia’s invasion of Ukraine. And, while production has been increasing, many analysts agree that it is mostly investors and supply-chain troubles, rather than the federal government, that are holding back companies from rushing more oil into the market.

New leasing is also unlikely to affect energy prices at all. Production will take years to come online—the Trump administration’s draft proposal for offshore leasing said production would be unlikely to begin for a decade or more. U.S. oil output is also already on the rise, despite the fact that the Biden administration hasn’t completed any new lease sales. Climate advocates point out that oil companies are already sitting on millions of acres of unused leases and thousands of approved permits, so already have years worth of development lined up. The majority of domestic production also comes from private and state lands.

“Whether you want to see more leasing or not, that discussion should not be part of the discussion about energy prices now, because new leasing takes many years to lead to new energy development,” Axelrod said. “It is not a solution and it is all about locking in future production.”

Within days of taking office, Biden issued an executive order pausing new leasing pending a review of the federal oil and gas program. It was the first step to deliver on a bold campaign pledge: To end new oil and gas development on public lands. Environmentalists cheered the move, seeing it as a prelude to what they hoped would be a strategic pivot away from new fossil fuel development. But Republican-led states and oil companies sued, and last year a federal judge in Louisiana blocked the moratorium.

That decision prompted the administration to hold the largest offshore lease sale in history last year. Those leases were eventually struck down by the courts, too, however, after environmental groups sued.

This week’s onshore lease sales are already facing their own legal challenges. On Tuesday, 10 environmental groups filed a lawsuit arguing that the government was violating federal law by failing to prevent “permanent impairment” and “unnecessary or undue degradation” from the development. The following day, Friends of the Earth and the Wilderness Society—neither of which was involved in the first lawsuit—sued to block the lease sales in Wyoming, saying the administration was failing to grapple with the climate and wildlife impacts of the development.

“What we’re trying to do is look at essentially what the science is telling us and what the timeline of the climate crisis is telling us and the role that the federal oil and gas program has in perpetuating those crises, and whether continued oil and gas exploitation on those lands is compatible with a livable planet,” said Kyle Tisdel, a senior attorney at the Western Environmental Law Center, which is representing the environmental groups in the lawsuit filed Tuesday. “I think the science is telling us no.”

Environmental groups roundly criticized the administration’s proposal to open any new areas offshore to drilling, and have said they will use the public comment period to press the Interior Department to choose that course.

“Expanding offshore drilling puts more ocean waters, marine life and coastal communities at risk of catastrophic blowouts and ongoing harm,” said Manish Bapna, president and chief executive of the Natural Resources Defense Council, in a statement. “If the administration chooses a plan that expands leasing, it will deepen our dependence on the fuels driving the climate crisis and padding the war chests of belligerent petro states.”

Some climate advocates say the administration’s own environmental analyses show that opening new lands to drilling will do more harm than good. For the first time, the Biden administration applied the so-called “social cost of carbon” to approximate the costs imposed by the additional greenhouse gasses that would be emitted as a result of the leasing.

While it is too early to compare those costs to the revenue that might be generated from rent and royalties, Friends of the Earth used the Biden administration’s own figures to analyze the costs for current leases. The group determined that in 2021, oil and gas development on public lands cost society far more than what it generated in revenue, and that current leases will cost society more than $2 trillion in climate impacts if they are fully developed.

“If you actually factor in the social cost of carbon, these no longer make sense,” said Ghio, of Friends of the Earth.

While many environmentalists have criticized the leasing decisions, allowing new drilling could smooth a path for what might be the last opportunity in years for a Democratic-led Congress to pass climate legislation. Sen. Joe Manchin, the West Virginia Democrat who scuttled the Biden administration’s attempts to pass climate legislation last year, has expressed support for passing a climate bill if it also supports domestic fossil fuel production. Manchin has long pressed for opening public lands to drilling.

After the offshore drilling plan was released, Manchin issued a statement welcoming its publication, but said: “I am disappointed to see that ‘zero’ lease sales is even an option on the table.”

By further restricting what Biden can do on his own, the Supreme Court’s decision on Thursday underscored the importance of passing legislation. But with mid-term elections in November bringing the possibility of Democrats losing their slim majorities in the House and the Senate, the window for Congressional action could be closing quickly.