Missed Onshore Lease Sales Another Blow to American Energy Production, Leadership

Mark Green
Posted September 6, 2022

Put this one on Washington’s to-do list to better support increased American energy production – alongside offshore oil and natural gas leasing, increased infrastructure, and oil and gas investment support: Conduct federal onshore oil and natural gas lease sales.

Washington shouldn’t need a reminder. Under the Mineral Leasing Act (MLA), the U.S. Interior Department’s Bureau of Land Management (BLM) is required to hold onshore oil and natural gas lease sales “at least quarterly.”

It was June 30 (last day of the very last month of the second quarter) when the feds last held an onshore lease sale. Interior has missed the deadline to announce a sale for the third quarter. Though September is the last month of the third quarter, Interior must provide 45 days’ notice before a sale can occur. If a sale were announced now, the earliest it could be held would be mid-to-late October. So, there won’t be a third-quarter sale.

That’s bad for American production at a time when it’s needed the most. With global oil demand continuing to outrun supply, American production can be a difference maker in the global marketplace. But this is difficult when federal oil and natural gas leasing is absent (offshore) or uneven (onshore). This also doesn’t help American energy security, considering the federal onshore produced significant portions of America’s oil and natural gas in 2021 – 7.4% of oil and 8.8% of natural gas (government data here, here and here). Cole Ramsey, API vice president for Upstream Policy:

“Consistent and robust access to federal leases and permits is one of the most important ways the BLM can help support America’s energy security.  America’s oil and natural gas operators continue to work to meet the energy needs of the nation every day, but they need federal policies that support those goals, not hinder them.”

Troubling beyond the apparent violation of the MLA’s quarterly sale requirement are Interior’s policies and/or procedures that resulted in the lapse.

Instead of consistency and predictability in offering lease sales, the Biden administration has cultivated uncertainty, which is bad for the oil and natural gas industry and its long lead times and sizeable investment requirements. Interior’s third-quarter miss brings the total of missed least sales under the Biden administration to six – all four quarters in 2021 and the first and third quarters this year.

The administration’s onshore leasing activity – or, more accurately, the lack of activity – adds to a dismal overall leasing picture. A new analysis by the Wall Street Journal found that the Biden administration has leased fewer acres for oil and natural gas drilling onshore and offshore than any other administration in its early stages since the end of World War II.

The Interior Department leased 126,228 acres for drilling through Aug. 20, President Biden’s first 19 months in office, the Journal reported. No other president since Richard Nixon in 1969-70 leased fewer than 4.4 million acres at this stage in a first term. President Truman leased 65,658 acres in 1945-46, the Journal found, but at that time offshore drilling was in its infancy.

Stephen Green, who oversees exploration and production for Chevron in North America told the Journal:

“The leases are kind of our raw material. Chevron or the industry needs a predictable source of raw material.”

.@WSJ: The Biden administration has leased fewer acres for oil-and-gas drilling offshore & on federal land than any other administration in its early stages dating back to the mid-1940s — the opposite of U.S. energy leadership at a time the world needs it. https://t.co/VvS87p38KH

— Mike Sommers (@mj_sommers) September 4, 2022

Frankly, the Biden administration’s record is unacceptable considering the importance of strong, uninterrupted production to American energy security.

Each missed lease sale – onshore and offshore – is missed opportunity for strengthening that energy security, as well as strengthening America’s global energy leadership. These also are missed opportunities to signal Washington’s firm, long-term support for American oil and natural gas, which is critically important to build investor confidence in future and necessary development.

The missed third-quarter onshore lease sale portends a void of some kind in American production, a zero on the leasing inventory where there should have been a number, with implications for future energy supplies here and around the world. New policy is needed at Interior that follows the requirements of the MLA so that future onshore leases are offered for sale.