When it comes to the offshore energy development, the Biden Administration must learn to walk and chew gum at the same time
Based on the administration’s distain for offshore oil and gas development, it cares little about energy security, energy inflation and US consumers.
The administration has proposed to hold just three offshore oil and gas lease sales between 2024-2029 — the fewest number historically held in the last 30 years, during a five-year period of the programme.
As proposed by the US Department of Interior, the National Outer Continental Shelf Programme will offer one offshore oil and gas lease sale each year in 2025, 2027 and 2029, with only acreage available in the US Gulf of Mexico. No lease sales will be offered off in Atlantic, Pacific, or Alaskan waters. This is an about face from the Trump Administration’s proposal to hold 47 lease sales off all coasts over a five-year period.
The administration is only offering the lease sales because it is mandated by law, and to advance its offshore wind agenda. Without the offshore oil and gas lease sales, it would be unable to offer any leases for offshore wind development under the Inflation Reduction Act (IRA).
IRA requires at least 60M acres to be offered in lease sales for offshore oil and gas development to allow the Bureau of Offshore Energy Management (BOEM) to offer a lease for offshore wind development the following year. To further slow-walk oil and gas development, the environmental analyses required for the lease sales will be delayed.
“The Biden-Harris administration is committed to building a clean energy future that ensures America’s energy independence,” Interior Secretary, Deb Haaland, is quoted as saying in a press release.
While the administration is committed to meeting its ambitious goal of having 30 GW of offshore wind in the water by 2030, it should not lose sight of energy security caused by geopolitical uncertainty. A war is raging in Europe for the first time in 70 years, OPEC has extended its production cuts to December and relations with China remain strained.
The price of Brent crude oil appears to be marching towards US$100 per barrel; it has increased 17% since the start of 2023, and was standing at US$92.50 as of 1 October.
Not surprisingly, the National Ocean Industry Association (NOIA), which represents the offshore oil and gas industry, was less than excited by the Biden Administration’s offshore oil and gas plans. NOIA president Erik Milito called it “an utter failure for the country”. Added Mr Milito: “The White House simply ignores our energy realities, once again limiting US energy production opportunities.”
Oil and gas developed in the US Gulf of Mexico has one of the smallest carbon footprints in the world, according to a study. Ironically, at a time when the world is using energy at record levels and needs to reduce CO2 emissions, taking offshore oil and gas developed in the Gulf of Mexico off the table just does not make sense. The world would have to look to other suppliers of oil and gas — ones with less attractive CO2 footprints.
There is no reason the US should not continue to develop its offshore oil and gas resources in tandem with offshore wind. This pragmatic approach would ensure energy security, reduce energy inflation and support the energy transition.
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