WASHINGTON—The Biden administration canceled plans to auction drilling rights in three regions off the U.S. coastline later this year, adding more friction to an uneasy relationship with the oil industry during a period of high gasoline prices.
The decision to cancel lease sales for two regions in the Gulf of Mexico and one off the coast of Alaska leaves oil-and-gas companies facing a blackout period of unknown length for access to new drilling spots in valuable offshore acreage.
A five-year schedule for offshore lease sales expires at the end of next month, and the Interior Department has yet to propose a new one. Canceling the pending sales with no new schedule yet proposed could mean the industry now faces years between successful federal offshore auctions.
“The lack of new lease sales will lower future supplies, which will keep energy prices high and drive inflation for years to come,”
Marty Durbin,
president of the energy arm of the U.S. Chamber of Commerce, said in a statement. “While some in the Administration have called for more domestic production, this action sends exactly the wrong signal to producers and markets.”
President
Biden
has pledged several times in recent months to help boost oil-and-gas production, saying families need help dealing with gasoline prices that have risen sharply. That new priority often conflicts with his agenda for addressing climate change, which has included promises to constrict oil-and-gas development on federal territory.
Mr. Biden started his presidency by introducing a moratorium on new leasing and permitting. Later moves to revive federal oil-and-gas work have been hampered by legal fights and other bureaucratic delays.
In its Wednesday night announcement, Interior cited continuing legal challenges in scrapping plans for lease sales in two regions in the Gulf of Mexico.
Three separate continuing court battles directly involve Gulf drilling. In one of them, a federal judge invalidated what had been the administration’s only successful offshore auction, a November sale that brought in a record $191 million. In another case, states that favor more drilling in the Gulf are suing over what they say was an illegal slowdown in lease sales.
Wednesday’s decision also affects roughly 1 million acres on the south coast of Alaska that officials had been evaluating for leasing. That plan was canceled “due to lack of industry interest,” an Interior Department spokeswoman said.
Decisions related to drilling on public lands and in offshore regions are unlikely to immediately impact gasoline prices because even after a lease has been granted, it can take months or years to tap the oil in a way that can meaningfully add to supply.
But the policies can have long-term effects on commodity markets. Offshore territory accounts for about 15% of all U.S. oil, according to Energy Department data, and drillers need new leases to keep production going.
When the plan to lease the Alaska region, known as Cook Inlet, was announced in 2016, Interior officials said that interest in drilling in the Arctic regions had fallen because of the boom in land-based production driven by fracking technology.
Leasing in the Alaska area was also likely to draw legal pushback from climate and environmental groups.
Kristen Monsell,
oceans legal director at the Center for Biological Diversity, said the offshore region is home to the endangered beluga population, which has fewer than 300 whales left and could have been further threatened by oil spills.
“To save imperiled marine life and protect coastal communities and our climate from pollution, we need to end new leasing and phase out existing drilling,” she said in a statement.
For onshore drilling, the Biden administration announced lease sales for some parcels of federal land last month, though it sharply reduced the amount of acreage available for leases and announced it would charge higher royalties on the oil and gas produced.
Last month, Interior Secretary
Deb Haaland
told the House Appropriations Committee that staffers in the department’s Bureau of Ocean Energy Management, which handles offshore drilling, have “been working hard on” a new five-year leasing plan.
“There is a significant amount of internal work that still needs to be done,” she said.
Write to Katy Stech Ferek at katherine.stech@wsj.com and Timothy Puko at tim.puko@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
WASHINGTON—The Biden administration canceled plans to auction drilling rights in three regions off the U.S. coastline later this year, adding more friction to an uneasy relationship with the oil industry during a period of high gasoline prices.
The decision to cancel lease sales for two regions in the Gulf of Mexico and one off the coast of Alaska leaves oil-and-gas companies facing a blackout period of unknown length for access to new drilling spots in valuable offshore acreage.
A five-year schedule for offshore lease sales expires at the end of next month, and the Interior Department has yet to propose a new one. Canceling the pending sales with no new schedule yet proposed could mean the industry now faces years between successful federal offshore auctions.
“The lack of new lease sales will lower future supplies, which will keep energy prices high and drive inflation for years to come,”
Marty Durbin,
president of the energy arm of the U.S. Chamber of Commerce, said in a statement. “While some in the Administration have called for more domestic production, this action sends exactly the wrong signal to producers and markets.”
President
Biden
has pledged several times in recent months to help boost oil-and-gas production, saying families need help dealing with gasoline prices that have risen sharply. That new priority often conflicts with his agenda for addressing climate change, which has included promises to constrict oil-and-gas development on federal territory.
Mr. Biden started his presidency by introducing a moratorium on new leasing and permitting. Later moves to revive federal oil-and-gas work have been hampered by legal fights and other bureaucratic delays.
In its Wednesday night announcement, Interior cited continuing legal challenges in scrapping plans for lease sales in two regions in the Gulf of Mexico.
Three separate continuing court battles directly involve Gulf drilling. In one of them, a federal judge invalidated what had been the administration’s only successful offshore auction, a November sale that brought in a record $191 million. In another case, states that favor more drilling in the Gulf are suing over what they say was an illegal slowdown in lease sales.
Wednesday’s decision also affects roughly 1 million acres on the south coast of Alaska that officials had been evaluating for leasing. That plan was canceled “due to lack of industry interest,” an Interior Department spokeswoman said.
Decisions related to drilling on public lands and in offshore regions are unlikely to immediately impact gasoline prices because even after a lease has been granted, it can take months or years to tap the oil in a way that can meaningfully add to supply.
But the policies can have long-term effects on commodity markets. Offshore territory accounts for about 15% of all U.S. oil, according to Energy Department data, and drillers need new leases to keep production going.
When the plan to lease the Alaska region, known as Cook Inlet, was announced in 2016, Interior officials said that interest in drilling in the Arctic regions had fallen because of the boom in land-based production driven by fracking technology.
Leasing in the Alaska area was also likely to draw legal pushback from climate and environmental groups.
Kristen Monsell,
oceans legal director at the Center for Biological Diversity, said the offshore region is home to the endangered beluga population, which has fewer than 300 whales left and could have been further threatened by oil spills.
“To save imperiled marine life and protect coastal communities and our climate from pollution, we need to end new leasing and phase out existing drilling,” she said in a statement.
For onshore drilling, the Biden administration announced lease sales for some parcels of federal land last month, though it sharply reduced the amount of acreage available for leases and announced it would charge higher royalties on the oil and gas produced.
Last month, Interior Secretary
Deb Haaland
told the House Appropriations Committee that staffers in the department’s Bureau of Ocean Energy Management, which handles offshore drilling, have “been working hard on” a new five-year leasing plan.
“There is a significant amount of internal work that still needs to be done,” she said.
Write to Katy Stech Ferek at katherine.stech@wsj.com and Timothy Puko at tim.puko@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8