The federal agency that manages offshore energy development recently proposed a five-year plan for as many as 11 and as few as zero new oil and gas sites in the Gulf of Mexico and off the coast of Alaska.
The proposal would pave the way for up to 10 new oil and gas lease sales in the Gulf and one in federal waters of Cook Inlet – a significant decrease from the 47 lease sales proposed under a draft plan of the 2018 Trump administration.
But that’s still not a big enough cut to satisfy climate hawks who say no amount of new oil and gas development is safe.
Here are five major questions about the proposal:
What does the plan actually do?
The proposal, presented by the Office of Ocean Energy Management of the Ministry of the Interior, is an intermediate stage between a project and a final program.
In a July 1 statement, Interior said the new proposal had been narrowed to include only the Gulf and Cook Inlet sites because there is existing production and infrastructure there. The proposal matches the Obama administration’s five-year plan, which spanned from 2017 to 2022 and also approved 10 sites in the Gulf and one off the coast of Alaska.
The 11 sites in the proposal would be the maximum allowed in a final plan. The interior could delete some in its final program proposal, expected later this year.
After Home Secretary Deb Haaland approves a final plan, BOEM would hold up to two auctions each year until 2028 for Gulf sites. The rights to the Alaska site would be auctioned in 2026. The Interior could also choose not to proceed with the sale of the sites approved in the final plan.
Will it make gas cheaper right away?
The leases – if approved – will not be auctioned for months. Once they are, it will take about five years for operations to begin in the shallower areas and even longer for the oil extracted there to reach the market.
In some cases, it would take more than a decade before oil companies could start production on a new lease, according to the draft proposal.
The long delay means the new leases would have virtually no immediate impact on prices at the pump, said Stephen Miller, professor of economics at the University of Nevada, Center for Economics and Business Research in Las Vegas, in a E-mail.
The proposal to grant new leases “will have no significant effect on current gas prices, as the time required before such leases produce tangible revenue is measured over several years,” Miller wrote.
Sara Teel, an economist with the Alaska Department of Labor and Workforce Development, said the development of Cook Inlet in particular would have little impact on gasoline prices because the site produces mainly natural gas.
Additionally, the proposed plan tentatively timed the Cook Inlet auction for 2026, when market conditions could be quite different, Teel said.
Yet proponents of increased drilling have used the current high oil and gas prices as justification for expanding development.
US House Natural Resources Committee ranking Republican Bruce Westerman of Arkansas suggested the timing of the plan’s announcement – 5 p.m. on the eve of a holiday weekend – was intended to distract attention.
“Well, the Americans took notice,” he said in a statement. “How could we not, when we pay more and more each time we fill up with gas? The DOI’s statement that the final plan may contain no lease sales is deeply concerning and would be unprecedented. This administration continues to demolish access to American resources, and we are paying the price at the pumps, at the grocery store, and in our family budgets.
What does this mean for climate change?
It depends, and opinions vary.
The scientific consensus calls for the elimination of fossil fuels as soon as possible. The Intergovernmental Panel on Climate Change has said that keeping global warming to an increase of 1.5 degrees Celsius – the benchmark estimated necessary to prevent the worst potential impacts of climate change – would require reducing emissions of net zero greenhouse gases by 2050.
President Joe Biden has set a goal of achieving net zero emissions, meaning that the amount of greenhouse gas emissions produced does not exceed the amount removed from the atmosphere, by 2050. and a 50% reduction from 2005 levels by the end of this decade. .
Issuing new lease sales, which would mean likely oil and gas development well into the 2030s, would threaten those goals, conservationists say.
“It would mean a continuation of the status quo, which is already a disaster for people in the southern Gulf,” said Kendall Dix, national policy director for the environmental group Gulf Coast Center for Law and Policy. “We are already seeing the effects of the climate crisis.”
The proposed plan recognizes that “to achieve these goals, the United States will need to dramatically change the way it both consumes and delivers energy, such that an increase in renewable energy production, electrification, energy efficiency and reduced consumption means less dependence on oil and gas resources and reduced demand.
But eliminating the supply of domestic offshore oil and gas may not be an effective way to achieve these goals, the proposal says.
As long as energy demand remains the same, any reduction in offshore fossil fuel production would have to be met by other energy sources, likely fossil fuels, the proposal says.
Who’s happy with that?
The range of options – from zero to 11 new leases over the next five years – has frustrated advocates of all political persuasions.
Environmental advocates say any new oil and gas infrastructure would forfeit Biden’s campaign pledge to aggressively pursue climate solutions.
“The Biden administration had the opportunity to meet the climate moment and end new offshore oil leases in the Interior’s five-year program,” said Drew Caputo, vice president of litigation for the environmental group. Earthjustice, in a press release. “Instead, his proposal to service a bunch of new offshore oil lease sales is a failure of climate leadership and a breach of their climate promises.”
Even in Biden’s own party, congressional leaders on energy policy were split on whether the proposal allowed too much or too little development.
“Holding out new offshore oil and gas lease sales over the next five years is a lose-lose for Americans,” said U.S. House Natural Resources Committee Chairman Raúl M. Grijalva. an Arizona Democrat, in a statement.
“It will do nothing to help bring down prices at the pump, and it will make our emissions targets virtually impossible to meet… Adding new lease sales to this equation as the climate crisis unfolds all around is absurd to us.”
“I’m disappointed to see that ‘zero’ lease sale is even an option on the table,” said Senate Energy and Natural Resources Chairman Joe Manchin III, a Democrat from West Virginia.
“I hope the administration finally greenlights a plan that will increase national energy production, in the cleanest way possible, while taking the necessary steps to get our offshore leasing program back on track. to give the market signals needed to provide price relief for every American.
The American Petroleum Institute, the trade group representing U.S. oil and gas producers, also said in a statement that it opposes a policy of no selling new leases.
So why did the Biden administration do this?
Five-year offshore lease plans are required by law and the previous plan, approved under President Barack Obama in 2016, expired on June 30. Without a plan, the agency cannot issue new leases.
Congressional Republicans hammered the administration for not having a five-year plan ready by the time the Obama-era one expired.
US Representative Garret Graves, a senior member of the House Select Committee on the Climate Crisis, said this was the first time the offshore leasing program had been halted.
“This should never have happened – the Department of the Interior literally had years to plan for this and still has additional steps to take,” the Louisiana Republican said. “Their self-imposed delays are contributing to higher prices, less certainty and greater reliance on Iran, Venezuela and others.”
Biden has made no secret of his ambition to slow oil and gas production in federal waters and on federal lands. After campaigning to tackle the climate crisis, one of his first acts as president was to suspend offshore and onshore oil and gas leasing.
But a federal judge ruled last year that the administration should restart leases, saying federal law requires periodic lease sales and only Congress can change that law. The administration announced that it was resuming lease sales two months after the decision.
It’s unclear if the decision impacted this month’s proposed plan.
The presence of a no-lease option in the proposal, however, indicates that Interior believes it has the power not to arrange new lease sales, Dix said.
An Interior spokesman declined to answer questions about the extent to which last year’s ruling influenced the proposal.