Biden administration auctions off drilling leases in Gulf of Mexico

The Biden administration on Wednesday auctioned off millions of acres in the Gulf of Mexico for oil and gas drilling, its first lease sale since taking office.

The administration initially wanted to institute a temporary pause on selling leases, but a court halted its moratorium, forcing it to begin auctioning off areas. 

Nevertheless, the sale garnered ire from environmental advocates and some Democrats, who said the department should have modified it or waited for the results of an appeal.

The sale put up about 80 million acres for lease, but only 1.7 million were actually leased, with companies placing bids on just 308 out of about 15,000 blocks. Thirty-three companies participated in the sale. 

The firms will pay a total of nearly $192 million to drill in the water, in addition to royalties for what they extract. 

Many of the blocks went to major players in the industry, with ExxonMobil bidding on more than 90, Chevron placing more than 30 bids and BP placing nearly 50 bids. 

Out of all the 308 blocks leased, only nine had more than one bid. 

It’s not clear what changes, if any, will be implemented as a result of the Biden administration’s review of the federal oil and gas lease program, but Interior Secretary Deb Haaland has repeatedly called for taxpayers to receive a fair return on their investment.

The effort to put a hold on new lease sales met with a backlash from congressional Republicans, and more than a dozen GOP-led states sued the administration. That led to a preliminary injunction that found “substantial likelihood” the executive branch lacks the authority to pause offshore oil and gas leasing.

Judge Terry Doughty of the Western District of Louisiana, a Trump appointee, argued in granting his injunction that the states were likely to face losses as a result of the leasing pause. 

Louisiana Attorney General Jeff Landry’s office led the lawsuit. The state’s solicitor general Elizabeth Murrill told The Hill on Tuesday the pause would have had a negative impact on her state. 

“We have a depressed energy economy, and it’s partly because the overall decision about whether to invest is made in part by the regulatory environment. And with such a hostile regulatory environment, those investments are likely to go elsewhere,” she said. 

The Biden administration’s pause did not impact existing drilling operations. The Energy Information Administration said in March that the now-enjoined pause wasn’t expected to have impacts until at least next year because of an eight-to-ten month delay between leasing and production. 

The decision to go through with the lease sale met backlash from the left. Activists and progressive Democrats have called it incompatible with the Biden administration’s stated climate agenda, particularly the week after President Biden asserted the return of American leadership at the COP26 international climate summit.

House Natural Resources Committee Chair Raul Grijalva (D-Ariz.) argued that the Department of the Interior (DOI) should be implementing the long-awaited reforms it has promised.

“Regardless of when we hold the lease sales, nothing prevents the DOI from informing the public and how it plans to reform and improve the federal leasing program,” Grijalva told The Hill in an interview Tuesday. “We’ve communicated to Secretary Haaland for the department to implement critical reforms as soon as possible.

Asked whether he would be comfortable with a modified lease sale or would prefer an ongoing hold pending the appeal, Grijalva said “it should remain on hold.”

In the meantime, he said, the federal government should address findings regarding issues with the leasing program such as pipeline safety and taxpayer exposure.

Grijalva’s advice, he said, was “go slow, appeal and look at necessary reforms that have been recommended by the [Government Accountability Office] and internally what’s been recommended.”

Interior spokesperson Melissa Schwartz declined to address the criticism directly on Tuesday. But she noted in a statement that the government is appealing the court decision and highlighted other efforts the department is taking to limit emissions related to future lease sales.

“The Department is complying with a U.S. District Court’s decision regarding Sale 257 while the government appeals the decision. At the same time, Interior is conducting a more comprehensive analysis of greenhouse gas impacts from potential oil and gas lease sales than ever before,” Schwartz said. 

She particularly highlighted the Bureau of Land Management’s efforts to consider cumulative greenhouse gas emissions — or how these emissions will impact the country’s national emissions targets overall — and the Bureau of Ocean Energy Management’s (BOEM) use of updated emissions models.

And while Republicans were pleased that the sale was occurring, Louisiana’s Murrill also called for the Biden administration to do more, including on its next five-year plan for offshore leasing. 

“We’re grateful that the lease sale is going forward on lease 257, but we just feel that there is a whole lot more that the government ought to be doing,” she said. 

Asked for a status update, BOEM spokesperson John Filostrat told The Hill that the agency is “working on” the next steps for that plan. 

“Currently, BOEM is working under the approved 2017-2022 National OCS Oil and Gas Leasing Program. We are working on the next steps for the upcoming National program,” Filostrat said via email. 

—Updated at 5:07 p.m.