Federal Oil Leases Slow to a Trickle Under Biden - WSJ
Category: News & PoliticsVia: vic-eldred • 3 weeks ago • 9 comments
By: Timothy Puko and Anthony DeBarros (WSJ)
WASHINGTON—The Biden administration has leased fewer acres for oil-and-gas drilling offshore and on federal land than any other administration in its early stages dating back to the end of World War II, according to a Wall Street Journal analysis.
President Biden's Interior Department leased 126,228 acres for drilling through Aug. 20, his first 19 months in office, the analysis found. No other president since Richard Nixon in 1969-70 leased out fewer than 4.4 million acres at this stage in his first term.
Harry Truman was the last president to lease out fewer acres—65,658—in 1945-46, when offshore drilling was just beginning and the federal government didn’t yet control the deep-water leases that have made up the largest part of the federal oil-and-gas program in modern times.
Mr. Biden pledged to stop drilling on federal lands as a candidate, saying the nation needs to transition to clean energy . He softened his stance as oil prices soared following Russia’s invasion of Ukraine —calling for boosting oil supplies to ease runaway inflation —but he has nonetheless spurned a leasing program that for decades has been a go-to asset for presidents looking to raise U.S. energy production.
“The president said he was going to stop leasing. And he’s been remarkably successful,” said David Bernhardt, an energy lawyer and former Interior secretary in the Trump administration.
The program had already been in a long decline as oil-and-gas companies shied away from offshore drilling and federal lands amid the boom in fracking shale. Under Mr. Biden’s stewardship the decline has quickened, with leasing down 97% from the first 19 months of his predecessor Donald Trump ’s term.
The Journal’s analysis, based on Bureau of Land Management and Bureau of Ocean Energy Management data, quantifies the slowdown in onshore and offshore leasing under Mr. Biden. It doesn’t include land leased in Alaska since the late 1990s, little of which fell into the periods analyzed.
The Interior Department, which oversees oil leases, said it issued a record high number of drilling permits for existing leases last year. Department spokeswoman Melissa Schwartz said industry trends have driven most U.S. production to private and state-owned lands, and that of the roughly 35 million acres now leased from the federal government, about 60% isn’t actively producing.
“There is no shortage of opportunity to produce oil from federal lands,” Ms. Schwartz said.
White House spokesman Abdullah Hasan said the administration is “making America a magnet for clean energy manufacturing investment, securing America’s clean energy future, and putting us on track to meet our climate goals” while still producing near-record amounts of oil.
Mr. Biden has said repeatedly that the U.S. needs to transition away from fossil fuels to reduce greenhouse-gas emissions that contribute to climate change.
“No more drilling on federal lands, no more drilling including offshore—no ability for the oil industry to continue to drill—period,” Mr. Biden said when he ran for office.
During his first week in office, Mr. Biden imposed an indefinite moratorium on new leases, and Interior required additional reviews on drilling permits for the next 60 days. Since then, the administration has tried only one offshore sale, which was invalidated by a court in January. It resumed onshore leasing this summer following a June 2021 ruling by a federal judge in Louisiana that the president’s moratorium was unlawful .
The Mineral Leasing Act of 1920 requires onshore oil and gas leasing “at least quarterly.” While the Biden administration has been in office for six quarters, it has conducted auctions in just one of them. That happened in late June, after the administration came under increasing pressure to tame soaring gasoline prices at the pump in the wake of Russia’s invasion of Ukraine.
Former presidents Jimmy Carter and Ronald Reagan boosted leasing to record highs in the 1970s and early ’80s in response to geopolitical oil crises. Mr. Reagan still holds the record, leasing nearly 48 million acres in his first 19 months, almost three times as much as any other president.
In 2009, the first year under former President Barack Obama, whom Mr. Biden served as vice president, Interior held 35 onshore oil- and gas-lease sales, according to a department release from 2010. In its first year, the Biden administration had none.
“Stepping up domestic production has been a priority of every president from Nixon right up through Obama and of course Trump,” said Daniel Yergin, the vice chairman of S&P Global and a noted oil-industry historian. “Whether Democrats or Republicans, presidents have wanted to embrace the idea of energy independence and production.”
The Inflation Reduction Act , signed into law by Mr. Biden on Aug. 16, requires the Interior Department to offer at least 2 million acres of federal land and 60 million offshore acres to oil and gas producers every year for the next decade. Those requirements must be met for an administration to permit some wind-power and solar-power development.
That still gives the Biden administration or others wiggle room if they want to stymie oil and gas, say lawyers and analysts. One tactic could be offering areas unappealing to the industry, they say. The administration could also simply forgo wind and solar development on federal territory.
Federal leases account for more than a quarter of all U.S. oil production. Crude production offshore and on federal lands hit a record high in 2021, according to Interior Department data that dates back through 2003.
So far, the drop-off in new leases hasn’t been a factor in the supply issues that helped send gasoline and other energy prices to historic highs earlier this year, since oil typically takes years to reach the market after federal leases are approved, analysts say.
Even so, new leases are needed to maintain supply later, potentially helpful in averting future shortages and price surges, energy industry leaders say.
“The leases are kind of our raw material,” said Stephen Green, who oversees exploration and production for Chevron Corp. in North America. “Chevron or the industry needs a predictable source of raw material.”
Mr. Biden entered office at a tumultuous time in the history of the federal oil-and-gas program, when development faces conflicting pressures from environmentalists and industry.
Environmentalists want Mr. Biden to fulfill his pledge to stop federal oil-and-gas leases to shift the country away from fossil fuels that create greenhouse-gas emissions.
Federal territory “seems to be the last place where we want accelerated oil and gas drilling,” said Andrew Wetzler, the chief program officer at the Natural Resources Defense Council, who commended the administration for its leasing slowdown. “It certainly is a dramatic change and it’s a very welcome one.”
Oil companies say Mr. Biden’s slowdown has gone too far. The sharp rise in energy prices has put pressure on Mr. Biden to take steps to boost oil output and bring oil prices down to tame inflation.
Within weeks of the Ukraine invasion and pump prices soaring to historic highs, the administration said on April 15 that it would restart the onshore leasing program but with a higher royalty rate charged to oil drillers.
After 17 months of no onshore lease sales, it held five June 29-30.
In all, the Interior Department has awarded 203 leases for oil and gas development during Mr. Biden’s first 19 months in office. Former presidents Trump and Obama each approved 10 times as many leases during the same period, the Journal’s analysis shows.
Going back further, the 203 leases under Mr. Biden amount to 3.2% of what presidents from Dwight Eisenhower to Mr. Trump awarded on average in the same span.
For offshore drilling, the Biden administration has yet to complete a sale.
It did hold one, on Nov. 17, offering 80 million acres in the Gulf of Mexico in a sale originally proposed by the Trump administration that would have been the largest offshore sale in U.S. history. It sold 1.7 million acres, but a federal judge invalidated the sale in January, ruling that the administration failed to do a proper environmental analysis.
The Biden administration declined to appeal the decision, letting the sale get canceled.