API Appeals GOM Lease Sale Annulment

The industry group called the decision by the court “misguided” and said it will result in significant uncertainty for Gulf of Mexico producers

API is challenging a court decision to vacate the most recent lease sale.

The American Petroleum Institute (API) filed a notice of appeal on 8 February with the US Court of Appeals for the DC Circuit of the decision by the DC District Court invalidating the results of the only federal lease sale for natural gas and oil held in 2021. The sale generated $198.5 million in total bids, and the revenues received are directed to the US Treasury, state and local governments, the Land and Water Conservation Fund, and the Historic Preservation Fund.

“Today we’re taking action to preserve American energy leadership and ensure that development in the Gulf of Mexico can continue to play a critical role in meeting the nation’s energy needs while generating billions in revenue for critical conservation programs,” said Frank Macchiarola, API senior vice president for policy, economics, and regulatory affairs. “At a time of rising energy costs and heightened geopolitical tensions, the misguided decision to cancel the only lease sale held last year is contributing to significant uncertainty for US natural gas and oil producers and limiting access to the affordable, reliable energy that’s needed here in the US and around the world.”

API said a 2016 report by the US Bureau of Ocean Energy Management analyzing the effects of offshore leasing restrictions found that US greenhouse-gas (GHG) emissions will be little affected and could increase slightly if foreign imports increased in the absence of new US offshore leasing and production. The report said foreign energy sources would substitute for reduced American offshore supply, and that increased production and subsequent transport of foreign oil would lead to higher GHG emissions than energy produced in the US.

“We call on the Department of Interior to join us in this effort and appeal the court’s ruling, which overlooked the comprehensive environmental analysis that the Bureau of Ocean and Energy Management conducted as part of the NEPA process prior to the lease sale, including careful consideration of the emissions impacts of reasonable alternatives,” added Macchiarola.

Last month, a US judge nullified the sale of Gulf of Mexico (GOM) offshore tracts that were part of Federal Lease Sale 257 held in November and ordered regulators to take a deeper look at the potential impacts on climate. US District Judge Rudolph Contreras in Washington, DC vacated the lease sale in a 67-page decision that found that the US Interior Department underestimated the climate impacts of the leases and doing a further analysis wouldn’t overly harm the companies seeking the leases.

Industry groups and oil companies argued that since the sealed bids have been opened and publicly read, there would be no way to “redo” the sale fairly as all the players now know which leases each were after.