The US Interior Department (DOI) has pulled the plug on three planned offshore oil and gas lease sales in Alaska and the Gulf of Mexico (GOM), effectively ending the program for 2022. DOI released a statement saying it would not move forward with the planned Cook Inlet, Alaska, Sale 258 due to “lack of industry interest in leasing the area.” Additionally, GOM Sales 259 and 261 will be scrapped due to “conflicting court rulings.” The decision to axe the lease sales comes at a time when high oil prices and concerns stemming from the Russian war in Ukraine have tightened global supply.
The implications of the cancelations may go beyond just this year. These three sales were the last under the current 5-year (2017–2022) federal leasing plan. The plan is set to expire in June and the Biden administration has yet to finalize a new program. With no plan in place, it would effectively bar DOI from holding any additional oil and gas lease sales in the future. While the administration is legally obligated to prepare a new program, there have been few indications that a new proposal is in progress.
President Biden paused all lease auctions on federal lands shortly after taking office pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices. The review was aimed at evaluating potential climate and other impacts associated with oil and gas leasing, as well as whether to adjust royalties paid to the federal government from onshore and offshore oil and gas production to account for climate costs.
However, last June, a federal judge in Louisiana ordered the lease sales to continue. Sale 257 was held in November 2021 and attracted almost $200 million in high bids from 33 participating companies. Post-sale, another court ruled the auction invalid and vacated the resultson grounds that the administration had failed to properly account for its impact on climate change. President Biden said his administration would not appeal the ruling.
When the administration does move forward with a new 5-year plan, the process, which is defined by law, will likely take up to 6 months to complete. This includes environmental studies, public comment periods, and federal review. That means if President Biden chose to move forward with a new 5-year plan in the coming weeks, the results would not be formalized until early 2023.
Alaska Sale 258 was set to offer 224 blocks toward the northern part of the Cook Inlet and cover approximately 1.09 million acres of seafloor, stretching roughly from Kalgin Island in the north to Augustine Island in the south.
No details regarding the makeup of the two canceled GOM sales had been released.
Lawmakers from both sides of the aisle are attempting to make their voices heard in the offshore oil lease debate. There are conflicting bills circulating Congress that would require the Bureau of Ocean Energy Management to hold the remaining lease sales in the 2017–2022 program despite its expiration, and/or would give specific deadlines for releasing a new 5-year program. Some would require lease sales in certain offshore areas at regular intervals. Other bills would prohibit any further leasing in certain offshore areas or throughout the US outer continental shelf.
