On Wednesday, the United States conducted its first auction of oil and gas drilling leases in the Gulf of Mexico in more than a year. Oil majors including BP, Chevron, and ExxonMobil made offers totaling $264 million for the sale required by the Inflation Reduction Act (IRA).
Only two weeks had passed since the Biden administration had approved the Willowoil drilling project on Alaska’s environmentally delicate North Slope.
President Joe Biden breaking a campaign pledge to end fossil fuel extraction on federal lands infuriated environmental groups, who have filed a lawsuit against the lease auction in federal court.
According to George Torgun, an attorney with Earthjustice, once these leases are made available and given, they will essentially lock in oil and gas production in the Gulf for the next 50 years, as CBS News reported.
In the litigation, Torgun is the attorney for the environmental organizations. This feels like a step backward in the fight against climate change, which this administration has said is an existential threat, especially in light of the recent Willow decision.
The Gulf oil and gas leases are expected to yield more than four trillion cubic feet of natural gas and up to 1.1 billion barrels of oil once they are produced, according to one government estimate, The Associated Press reported. According to the analysis, its use would result in tens of millions of tons more carbon dioxide emissions.
Chevron placed the highest bid of $108 million for 75 lease tracts, followed by BP’s $47 million and Shell’s $20 million. The overall number of bids increased from the previous auction by 38%.
September Is Set Aside for Another Gulf Lease Sale.
Although the administration has made much noise about addressing climate change and shifting our economy away from fossil fuels, huge oil and gas projects are still being built, both on land with Willow and offshore in the Gulf of Mexico, according to Torgun.
According to Sami Yahya, an analyst with S&P Global, businesses may be attempting to lock up leases if future restrictions on auctions are implemented.
Yahya stated, as quoted by The Associated Press, “From a global viewpoint, we are continually going toward an atmosphere with stronger anti-fossil fuel attitude, as operators will continue to face increased public scrutiny regarding emissions.”
As a compromise with West Virginia Democratic Senator Joe Manchin, the IRA forbids renewable energy leases on public lands unless the federal government first sells tens of millions of acres for the extraction of fossil fuels. It also includes regulations for oil and gas lease sales on public lands.
114,000 square miles, or more than the size of the State of Arizona, were up for auction in total, yet just 2,600 square miles were covered by bids.
Because those offshore developments take years before the oil is pumped, oil and gas could be produced on the parcels well after 2030.
Exxon has been attempting to collaborate with industrial facilities in the Houston Ship Channel on carbon capture and storage (CCS).
According to Eric Smith, associate director of the Tulane Energy Center, “They went out specifically to lease property where the geology was ideal for storage and they understood any oil and gas extraction on a commercial scale was not a possibility.”
Although switching to renewable energy is more successful at reducing carbon in the atmosphere than CCS, businesses are relying on it to keep fossil fuel facilities open for an extended period.
According to The Associated Press, Justin Rostant, a lead analyst with the business consultancy firm Wood Mackenzie, there may be some risks involved with whether they can use it for carbon capture. That raises a lot of questions.
More than 500 square miles of onshore oil and gas leases in numerous states, including Nevada, New Mexico, Wyoming, and Montana, will be put up for auction as part of the Biden administration’s other plans.
The approval of massive fossil fuel extraction commits the United States to a long-term reliance on fossil fuels and maintains the current trajectory of rising carbon emissions, which, according to the best available science, will have disastrous effects and incur enormous costs for the economies of the United States and the rest of the world, according to Woody Martin of the Sierra Club’s Delta Chapter in Louisiana.