The Louisiana Oil & Gas Association (LOGA)’s letter to the Bureau of Ocean Energy Management (BOEM) at the U.S. Department of Interior earlier this month is likely among the factors that caused President Biden to sign the Inflation Reduction Act (IRA), which delays an oil and gas lease sales ban in the Gulf of Mexico and Alaska for the next few years.
“Our letter was sent prior to the IRA being signed into law,” said Mike Moncla, president of LOGA. “What is disappointing is the additional taxes imposed as well as the EPA’s reinstated authority to regulate the oil and gas industry that were included in the bill, which is ultimately why we at LOGA opposed the legislation.”
Moncla’s Aug. 15 letter to the Ocean Energy Management Bureau Chief Kelly Hammerle asked her to quickly finalize a five-year offshore leasing program and include the maximum number of offshore lease sales.
A lapse would result in 885,000 fewer barrels of oil and natural gas per day from the Gulf of Mexico (GOM) by the year 2036, which is a 33% decrease if the five-year program was operational, according to LOGA data.
“Less oil means that we’re going to have to depend on imports from other countries, we’re going to have to crawl to the Organization of the Petroleum Exporting Countries (OPEC) for oil and that we will cease to be the energy powerhouse that we’ve been for decades,” Moncla said. “Oil and gas royalties are the United States’ number two invoice maker behind income tax revenue. So, naturally, less production means less money in royalties.”
The current status of the Final Outer Continental Shelf Oil and Gas Leasing Program and its ten proposed lease sales in the Gulf of Mexico mean that the 33 companies that have paid $292 million will finally be able to work towards developing the acreage leased.
“That’s some good news,” Moncla told the Louisiana Record. “As for the rest of the proposed sales, we are currently awaiting BOEM to make their final recommendation on the number and location of Gulf lease sales.”
However, the Fifth Circuit Court of Appeals vacated a lower court order last week that forced the Biden administration to hold lease sales.
“This is nothing more than your typical bureaucratic red tape,” Moncla said. “The right-hand doesn’t know what the left hand is doing. On one hand, the IRA allows for lease sales to go through while Biden’s liberal courts are saying that they cannot. As a result, this will likely have to go to the Supreme Court.”
To make matters worse, he said, the five-year program could still fall short of what is needed to meet the country’s energy needs.
“There isn’t an alternative that would replicate the production we get from the Gulf of Mexico,” Moncla added. “The Gulf of Mexico provides nearly 16% of our nation’s energy. That’s a huge chunk.”