The Administration’s Lilliputian Offshore Oil and Natural Gas Leasing Program

Mark Green
Posted October 4, 2023

Collected observations on the Biden administration’s final proposed five-year offshore oil and natural gas leasing program that was issued last week – long overdue, coming a year and a half after the previous program expired in mid-2022.

The Energy Security Stakes: The five-year program is critically important to future offshore production and future American energy security, because a lease sale cannot be held unless it is included in the program. Since offshore projects take 10 years or more to start producing, the government’s program should provide regular opportunities for new leasing to replace naturally declining wells and to grow production to meet rising demand.

Unfortunately, the final proposal for the new program released by the U.S. Interior Department’s Bureau of Ocean Energy Management (BOEM) falls short.

Remember: The oil production we have today is because of decisions made to lease and develop resources years ago, dating back to the Trump, Obama and prior administrations.

On Offshore Leasing, Less is … Less: The new program’s minimalist approach is alarming in the context of America’s energy needs, with 15% of total U.S. oil production coming from the outer continental shelf, mostly in the Gulf of Mexico. The program calls for just three offshore lease sales in five years. That’s it. The proposal’s 335 pages boil down to the skimpy schedule below:

And it could be less. BOEM’s program shows the maximum number of leases that can be held over the next five years, but the administration could opt for less. With just three sales over five years, this schedule is the smallest in the program’s 43-year history:

As things stand, 2024 will be the first year since 1966 with no offshore lease sales. Because the program doesn’t schedule a sale until 2025, that’s the earliest one can be held. While that’s better than no lease sales ever again, the administration’s program risks a production gap that could weaken America’s energy security in the future.

Again, offshore production is a big part of developing oil and natural gas, which supply more than 70% of America’s energy today and will supply 64% of it in 2050, according to analysis in the leasing program:

Yes, renewable energy is projected to more than double by 2050, but renewables’ share of the energy Americans use still will be less than half the energy projected to come from oil and natural gas. The administration’s puny offshore leasing program spells trouble for meeting the nation’s energy needs.

More About Wind Than Oil and Natural Gas: Offshore energy expert Bud Danenberger’s initial take on the new five-year program was brief but pointed: “Wow! When is a 5-year leasing program not really a leasing program?”

Answer: When it’s really an offshore wind leasing program.

The Interior Department’s press release on the five-year program is pretty clear that the only reason any offshore oil and natural gas leasing is planned over the next five years is to facilitate offshore wind leasing (though there are indications the administration has run into headwinds with the wind leases already granted).

Wind and oil and natural gas are linked by the Inflation Reduction Act of 2022 (IRA), which states that for the next 10 years (starting last November), the Interior secretary cannot issue an offshore wind lease unless an offshore oil and natural gas lease sale has been held in the preceding 12 months and the sum total of acres from the oil and natural gas lease sale in the previous 12 months is not less than 60 million acres. BOEM (our emphasis added):

“The Proposed Final Program includes a maximum of three potential oil and gas lease sales – the fewest oil and gas lease sales in history – in the Gulf of Mexico Program Area scheduled in 2025, 2027 and 2029. In compliance with the terms of the IRA, these three proposed lease sales are the minimum number that will enable the Interior Department to continue to expand its offshore wind leasing program through 2030.”

U.S. Interior Secretary Deb Haaland:

“The Proposed Final Program, which represents the smallest number of oil and gas lease sales in history, sets a course for the Department to support the growing offshore wind industry and protect against the potential for environmental damage and adverse impacts to coastal communities.”

The day of the announcement, Interior's home page included a link to the offshore oil and natural gas leasing program under a photo of wind turbines:

OK, we get the drift. Far from strongly supporting future development of America’s leading energy sources, the administration is proud of its minimalist program – and picking proverbial winners and losers. Strange. With gasoline prices rising amid tightening global crude oil markets – now 50% higher than they were when President Biden took office in January 2020 – the administration is trumpeting a weak plan instead of supporting robust American production that could offer future relief to American families and businesses.

Imagine … Finally, pretend for a moment that you’re the leader of an American oil and natural gas company. You’re responsible for decision-making on multi-billion-dollar investments involving multi-year offshore projects, and you’re absorbing the administration’s announcement of the smallest offshore leasing program ever – all but saying it couldn’t care less about future offshore oil and natural gas development. What’s your comfort level for your company’s future investment in the U.S.?

In fact, the new offshore leasing program is another brick in the wall of an administration strategy to impede and drive down American oil and natural gas production – which provides safe, reliable and affordable energy to families and businesses every day and is the anchor to the nation’s energy security in an uncertain world.

The bare-bones program comes after canceling Arctic leases, halting new federal leasing for months, canceling oil and natural gas infrastructure, pursuing a regulatory onslaught to restrict oil and natural gas development, and continuing an anti-oil and natural gas rhetorical drumbeat that further chills oil and natural gas investment.

Americans don’t have to imagine the effects of higher energy costs and higher costs for just about all goods and services. Some remember the 1970s. Everyone else has gotten a taste of these effects amid ongoing inflation. Meanwhile, the Biden administration offers the empty promise that it will help consumers, while virtually ignoring the real solutions to be found in fully harnessing America’s oil and natural gas potential. That’s the message of this woefully inadequate offshore leasing program.

Mike Sommers, API president and CEO:

“At a time when inflation runs rampant across the country, the Biden administration is choosing failed energy policies that are adding to the pain Americans are feeling at the pump. This restrictive offshore leasing program is the latest tactic in a coordinated strategy to reduce energy production, ultimately weakening America’s energy dominance, limiting consumers access to affordable reliable energy and compromising our ability to lead on the global stage. For decades, we’ve strived for energy security and this administration keeps trying to give it away.”