Biden Administration Restricts Oil & Gas Development

The Biden administration has stirred controversy by blocking millions of acres of federal waters from an upcoming oil and gas lease sale, a move stemming from a settlement reached with environmental groups over wildlife protections. The Bureau of Ocean Energy Management (BOEM), an arm of the Interior Department responsible for offshore energy development, has scaled back Lease Sale 261 in the Gulf of Mexico, scheduled for late September. This comes as the final planned federal oil and gas sale, and its impact is raising concerns within the energy industry.

The decision has drawn sharp criticism from industry leaders. Erik Milito, President of the National Ocean Industries Association, expressed concern over the exclusion of extensive and promising acreage that could potentially contribute to energy production. The reduction in acreage could be detrimental, especially given the current economic climate with rising inflation affecting Americans’ costs, including gasoline prices. BOEM’s move is seen as a setback to America’s energy production capabilities, and industry voices argue that it goes against the country’s energy security needs.

Initially planning to offer 13,620 blocks across 73.4 million acres, BOEM revised these figures to 12,395 blocks spanning around 67 million acres in the Gulf of Mexico. The exclusion of potentially oil-rich tracts, particularly those strategically located within the lease area, is causing concern for industry stakeholders. While offshore lease sales often cover substantial maritime areas, bids are received on only a fraction of the projected blocks, based on resource estimations and expected returns on investment.

Critics are also pointing to the additional restrictions imposed by BOEM on oil and gas vessel traffic associated with the lease sale. These measures include the requirement for trained visual observers on all vessels in the area, speed limits for ships, and daytime-only travel. Industry representatives argue that these restrictions disproportionately affect fossil fuel companies, ignoring other vessel traffic.

BOEM’s decision to implement these restrictions is a direct response to a settlement between the Biden administration and environmental groups, including the Sierra Club. The settlement aims to provide enhanced protections for the endangered Rice’s whale, expanding the conservation focus beyond economic considerations.

Both the National Ocean Industries Association (NOIA) and the American Petroleum Institute (API) assert that the administration’s actions clash with the Congressional intent of the Inflation Reduction Act. This legislation reinstated multiple lease sales, including Lease Sale 261, which were initially revoked by the Biden administration in 2022. The decision is seen as disregarding the economic implications and potential risks to certain species, such as the Rice’s whale, and furthering the divide between energy priorities and environmental concerns.

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