A controversial offshore oil and gas lease sale in the Gulf of Mexico will be delayed until Nov. 8, leaving the Biden administration’s proposed acreage restrictions on the sale unsettled for now, a federal appeals court has decided.
A three-judge panel of the Fifth Circuit Court of Appeals delayed the lease sale last week, pushing back the sale that was originally scheduled for Sept. 27. A federal district court previously rejected the Bureau of Ocean Energy Management’s environmental provisions, which would have shrunk the size of the lease and restricted vessel traffic in certain areas in order to protect the habitat of the endangered Rice’s whale in the northeastern Gulf waters.
The state of Louisiana, American Petroleum Institute and major oil companies sued the administration over allegations that the restrictions were arbitrary and would cause undue economic burdens. The litigation resulted in Western District of Louisiana Judge James Cain Jr. siding with the plaintiffs on Sept. 21 and enjoining BOEM’s recently added environmental restrictions.
If the BOEM limitations were left in place, the plaintiffs would have suffered irreparable injuries, with the state of Louisiana losing $2.2 million yearly in revenues and industry business plans requiring major overhauls, Cain said in his opinion.
“BOEM will include lease blocks that were previously excluded due to concerns regarding potential impacts to the Rice’s whale distribution in the Gulf of Mexico,” the federal agency said in a news release. “BOEM will also remove portions of a related stipulation meant to address potential impacts to Rice’s whale from the lease terms for the leases that may be issued as a result of Lease Sale 261.”
In addition, the appeals court order will allow adequate time to avoid a chaotic lease sale process, the agency said.
The delay places pressures on energy-development efforts in the Gulf, according to the Louisiana Oil & Gas Association (LOGA).
“The bottom line is that this lease sale is being delayed due to protests over the Rice’s whale, which environmental groups are purporting to be in the area,” LOGA President Mike Moncla said in an email to the Louisiana Record. “So yes, delays are not good for progress. With the supply and demand issues on oil, along with record-level inflation, one would think the Biden administration would ease up on their anti-oil and gas regulations that hurt all Americans.”
A lease sale is only the first step in the energy-development process. Oil companies need to win the bid, do seismic work, analyze the geology of the region, contract drilling rigs and then consider transport options, according to Moncla.
Delays can also affect prices at the pump for Americans, since 15% of the country’s oil comes from the Gulf, he said.
“For Louisiana, which receives millions of dollars annually from the Gulf of Mexico Energy Security Act (GOMESA), delays like these will also diminish these funds that are dedicated to rebuilding our coast,” Moncla said.
State Attorney General Landry filed the lawsuit after the Biden administration violated a congressional measure and acted in concert with “radical activists” who seek to put a stop to oil exploration in the Gulf, according to a news release from the Attorney General's Office.