Biden Bans New Federal Oil and Gas Leases

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28-Jan-2021

On Wednesday, President Joe Biden signed a long-expected executive order to set up a climate task force and direct federal agencies to take action to counter climate change. Controversially, the order halts all new oil and gas leases in federal waters and moves to raise federal oil and gas royalty fees.

“The Secretary of the Interior shall pause new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices,” Biden ordered. “The Secretary of the Interior shall consider whether to adjust royalties associated with coal, oil, and gas resources extracted from public lands and offshore waters, or take other appropriate action, to account for corresponding climate costs.”

The order does not ban new coal mining leases, revoke existing oil and gas leases, or affect any activity on state or private land. New drilling permits for work on existing federal offshore oil and gas E&P leases are still being processed at a normal rate at BOEM, according to Bloomberg. 

“This wasn’t about impacting existing permits and fracking; this was about new leases on federal lands,” clarified national climate advisor Gina McCarthy at the White House daily press briefing Wednesday. 

The American Petroleum Institute – the industry association for U.S. oil and gas producers – warned that the leasing ban would have a significant negative impact on the economy and the environment.

“With a stroke of a pen, the administration is shifting America’s bright energy future into reverse and setting us on a path toward greater reliance on foreign energy produced with lower environmental standards,”said API president and CEO Mike Sommers. “Limiting domestic energy production is nothing more than an ‘import more oil’ policy that runs counter to our shared goal of emissions reductions and will make it harder for local communities to recover from the pandemic.”

The order also calls for the Interior Department to review its permitting processes in order to “increase renewable energy production . . . in [federal] waters, with the goal of doubling offshore wind by 2030.” The target reflects a Biden campaign pledge. 

“This is the whole-of-government approach to the climate crisis that is needed,” said Heather Zichal, CEO of the American Clean Power Association (ACP), the industry body representing America’s offshore wind, onshore wind and solar industries. “Driving federal procurement to renewable energy, targeting federal lands and water for clean energy development, and accelerating the permitting of clean energy and transmission projects . . . will help deliver on [Biden’s] twin pledges to simultaneously rebuild the U.S. economy and address the threat of climate change.”

The Offshore Marine Service Association (OMSA) – which represents vessel operators with interests in both offshore wind and offshore oil – called the decision on E&P lease sales a “step backward.”

“While the executive order talks about increasing offshore wind goals, the vessels and mariners necessary to construct tomorrow’s wind projects are the same ones harmed by today’s moratorium on the oil and gas industry. If this continues, these assets won’t be around when the wind industry moves from a goal to a reality,” said OMSA President and CEO Aaron Smith. “While we look forward to working with the Biden administration to enhance our shared priorities of advancing the domestic maritime industry and domestic offshore wind industry, today we are disappointed in this big step backward on both accounts.”

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