A closely watched Gulf of Mexico oil and gas lease sale that had been scheduled to happen this week has been further delayed as a result of an order issued by the U.S. Fifth District Court of Appeals.
A U.S. Justice Department attorney sent a letter to the court on Nov. 2, noting that the Bureau of Ocean Energy Management (BOEM) cannot be certain of the size of the lease area until after oral arguments take place on the merits of BOEM`s previously announced environmental restrictions on the sale. Those arguments were scheduled to occur this week.
“Potential bidders in Lease Sale 261 should not submit bids until BOEM provides additional instruction,” BOEM said in a Nov. 2 news release. “BOEM will hold any bids already received and will hold the sale after it receives further direction from the Court of Appeals.”
Major oil companies and the American Petroleum Institute (API) sued the Biden administration over the administration’s decision in August to limit the size of the lease sale in order to protect the habitat of the endangered Rice’s whale in the northeastern part of the Gulf. In addition, BOEM also proposed to restrict vessel travel in that part of the Gulf.
The oil industry argued, and a federal judge in Louisiana agreed, that the administration’s plans would cause significant burdens for Louisiana energy companies and threaten oil revenues that the state would receive as a result of industry activities.
API criticized the administration’s decisions about the lease sale, contending that they have led to a series of delays.
““From issuing the weakest five-year program for offshore leasing in U.S. history to repeatedly delaying congressionally mandated lease sales, the Department of the Interior continues to demonstrate its willingness to ignore the clear and growing need to expand American energy leadership and reduce reliance on foreign energy sources,” the API vice president of upstream policy, Holly Hopkins, said in a statement emailed to the Louisiana Record. “Beyond the sale that was postponed (on Oct. 26), there will be no offshore sales until 2025 – the longest gap in offshore sales since 1966.”
The Interior Department’s inconsistent policies are creating doubts among energy company officials about whether to invest in future Gulf production, according to Hopkins.
API also stresses that oil produced in the Gulf is low in carbon intensity and that if this oil is eventually replaced by oil produced in other parts of the world, greenhouse gas levels could be elevated.
The administration’s proposals to reduce vessel traffic in the Gulf are also coming under greater criticism, according to API.
A recent study conducted by Energy and Industrial Advisory Partners (EIAP) concluded that the proposed restrictions on oil and natural gas vessels that travel in the Gulf of Mexico would have a significant effect on industry jobs, government revenue and energy production.
The limitations would lead to a decline of 25%, or the equivalent of more than 500,000 barrels of crude per day, of Gulf energy production by 2040, according to API.
In addition, the proposed new federal rules on vessels operating in the Rice’s whale area were recently denied by the National Oceanic and Atmospheric Administration, which said it would not consider the proposal until a recovery plan was drawn up and vessel assessment risks were assessed.