Energy transition

US Scales Down Offshore Leasing Plan  

The Biden Administration plans for a maximum of three lease sales in the Gulf of Mexico from 2024 to 2029.

Source: Getty Images

The US Department of Interior has released its plans to begin phasing out oil and gas leasing in the Gulf of Mexico (GOM) to help the fledgling offshore wind industry continue to grow.

Offshore wind is a key piece in President Biden’s strategy of addressing climate change by transitioning the US onto renewable energy. In March 2021, his administration set a target of deploying 30 GW of offshore wind capacity by 2030.

The proposed final program for the 2024–2029 National Outer Continental Shelf (OCS) Oil and Gas Leasing Program includes a maximum of three potential oil and gas lease sales—the fewest in history—in the GOM Program Area.

According to the Interior Department, the sales scheduled in 2025, 2027, and 2029 are the minimum numbers needed to enable it to continue to expand its offshore wind leasing program through 2030 and follow the terms of the Inflation Reduction Act (IRA) passed last year.

“The reduction of the next National OCS Program to a maximum of three potential lease sales will bring the Federal offshore oil and gas program in line with the Biden-Harris administration’s goal of net-zero emissions by 2050 and meet the IRA’s requirements for future offshore renewable energy leasing,” the department said in a release.

The IRA does not allow the Bureau of Ocean Energy Management to issue a lease for offshore wind development unless the agency has offered at least 60 million acres for oil and gas leasing on the OCS in the previous year.

Leasing will be limited to the GOM, where there is existing production and infrastructure. This area includes the portions of the Western, Central, and Eastern GOM planning areas not currently under presidential withdrawal.

“The Biden-Harris administration is committed to building a clean energy future that ensures America’s energy independence,” said Secretary of the Interior Deb Haaland.

“The Proposed Final Program, which represents the smallest number of oil and gas lease sales in history, sets a course for the Department to support the growing offshore wind industry and protect against the potential for environmental damage and adverse impacts to coastal communities,” she said.

The first offshore wind auction in the GOM was held in late August and ended with a single winner. German utility company RWE won the Lake Charles Lease Area with a high bid of $5.6 million.

The three planned lease sales represent a steep reduction from the previous administration’s original plan to host up to 47 lease auctions across all coastal areas in the same period.

“The previous proposal presented risks to local coastal economies—particularly for communities along the east and west coast where offshore oil and gas development has not been authorized in decades, if ever,” the department stated.

Industry response to the announcement was swift.

“The release of this US offshore leasing program, mandated by law and long overdue, is an utter failure for the country,” said National Ocean Industries Association president Erik Milito in a statement.

“President Biden’s approach to severely limit leasing significantly curtails access to a critical national asset at a time when energy inflation is rampant, the likelihood of a national recession looms, and global efforts are intensifying to curb greenhouse gas emissions,” he said.

Milito added that “policies that limit domestic offshore development force us to rely more on energy imports, often from countries with higher emissions. This jeopardizes our energy security and economic prosperity and undermines our efforts to reduce emissions and combat climate change—goals purportedly championed by the current administration.”

Jeff Eshelman, president and chief executive of the Independent Petroleum Association of America, said in a statement that the organization is "disappointed by the content of the Biden Administration’s offshore 5-year leasing program released today. It’s clear that the Biden Administration has chosen to align its policy decisions with environmental activists rather than put the best interest of American consumers first.”

He added that a plan with only three leases in five years would “hamper American production” and “jeopardize our energy security.”

American Petroleum Institute President Mike Sommers said in a statement, "This restrictive offshore leasing program is the latest tactic in a coordinated strategy to reduce energy production. For decades, we've strived for energy security, and this administration keeps trying to give it away."

The plan is subject to a 60-day waiting period before it can be approved.