NEW ORLEANS: The US Interior Department will auction off vast oil reserves in the Gulf of Mexico on Wednesday, selling an estimated 1.1 billion barrels of crude oil, the first such sale under President Joe Biden and before him to reach climate goals. A harbinger of challenges that depend on deep cuts in fossil fuel emissions.
The livestreamed sale will invite energy companies to bid on drilling leases in about 136,000 square miles (352,000 square kilometers) in an area nearly twice that of Florida.
Leases will take years to develop before companies start pumping crude oil. That means they can continue to produce until 2030, when scientists say the world needs to go on a path of cutting greenhouse gas emissions to avoid catastrophic climate change.
The auction came after a federal judge struck down a suspension of fossil fuel sales in a lawsuit brought by Republican states that Biden had imposed when he first took office.
Democrats campaigned on promises to end drilling on public land and water, which accounts for about a tenth of US energy-related emissions. Yet as he tried to entice other world leaders to bolster international efforts against global warming, Wednesday’s sale reflects Biden’s difficulties on climate issues at home.
The administration last week proposed another round of oil and gas lease sales in Montana, Wyoming, Colorado and other western states in 2022. Interior Department officials went further despite the conclusion that burning the fuel could result in billions of dollars in potential future climate damage.
We had Trump’s unrestricted approach to oil and gas on federal lands and Bidens’ initial attempt to stop drilling. Now it looks like the Biden administration is trying to find a new policy, said researcher Robert Johnston of the Columbia University Center on Global Energy Policy.
He said they are very cautious about reducing their fragile pace on climate issues.
An environmental review of the sale of the Gulf of Mexico, conducted under former President Donald Trump and ratified under Biden, led to an unexpected conclusion: Extracting and burning the fuel would release less greenhouse gases into the ground than would it.
Similar claims in two other cases in Alaska were dismissed by federal courts after challenges from environmentalists. Climate scientist Peter Erickson whose work was cited by judges in one case said the Interior Department’s analysis had an obvious omission: He excluded greenhouse gas growth overseas, which would result in more Gulf oil on the market.
The math on things like this is extremely simple,” said Eriksson, a senior scientist at the Stockholm Environment Institute, a non-profit research group headquartered in Sweden. If the new leases expand the global oil supply, it will have a proportional impact on emissions from burning. Oil therefore, leasing these in the Gulf of Mexico would increase global emissions.
In recent months the Interior Department’s Bureau of Ocean Energy Management has changed its emissions modeling methods, citing Ericsson’s work. But officials said on Wednesday it was too late to use the new approach for lease sales, which they said had been done through “a rigorous process with specific timelines”.
“The environmental analysis for lease sale 257 was already completed and does not include a new approach to considering the impacts of foreign consumption of oil and gas,” the agency said in a statement to the Associated Press.
Administration officials declined the AP’s interview requests. As for the upcoming sale, spokeswoman Melissa Schwartz said Interior is conducting a more comprehensive emissions review than any prior administration, as it appeals the court order that forced them to restart.
Eric Milito, president of the National Ocean Industries Association, said he was unsure whether using the new approach would change the government’s conclusions, as drilling for oil in other parts of the world is less efficient and imports also add to carbon costs. He described the Gulf as the backbone of US oil production and said companies see it as a strong investment.
The continued use of the old analysis rankles drilling opponents who say Biden is not following through on his climate pledges.
We’re talking about transitioning away from a fossil fuel economy and they’re selling a lease sale a giant carbon bomb, said attorney Drew Caputo with EarthJustice, challenging the Gulf lease sale pending in federal court. The giver is a lawsuit. This creates a property right to develop those leases. If you sell the lease it is much harder to keep the carbon in the ground.
Some Democrats also objected to the sale. Ral Grijalva, the chairman of the House Natural Resources Committee, said Biden had promised to take the lead on climate issues but continued to run a fossil fuel program with a long history of mismanagement.
Grijalva said in a statement on Tuesday that the administration needed to do better.
Since the Department of the Interior began Gulf-wide lease sales in 2017, an average of 1,075 square miles (2,780 square kilometers) have been sold at each sale, generating approximately $1 billion in revenue over that period. The largest was about 1,875 square miles (4,856 square kilometers) in March 2019.
The Gulf of Mexico accounts for about 15% of total US crude oil production and 5% of natural gas.
Industry analysts expect some pick-up in Wednesday’s sales, as oil prices have risen sharply over the past year. Analyst Justin Rostant at industry consulting firm Wood Mackenzie said it is a chance for companies to secure drilling rights before administration or Congress can increase drilling fees and royalty rates or adopt new restrictions on environmental permits.
He said an outright ban on new leases and drilling is unlikely after a federal court overturned Biden’s temporary suspension.
Rostant said different companies have different approaches and different strategies. Some might think that this year could be a big one.
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Brown reported from Billings, Montana.
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Follow Matthew Brown on Twitter: @MatthewBrownAP
Disclaimer: This post has been self-published from the agency feed without modification and has not been reviewed by an editor
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