On May 11, the Interior Department announced the cancellation of several Outer Continental Shelf (OCS) lease sales, including Lease Sale 258 (Cook Inlet, Alaska) and Lease Sales 259 and 261 (Gulf of Mexico), citing a lack of energy industry interest and delays due to conflicting court rulings. Further details about these cancelled offshore lease sales and potential next steps in the OCS leasing program are provided below.
OCS Leasing in Alaska (Lease Sale 258 – Cook Inlet)
In September 2020, the Interior Department’s Bureau of Ocean Energy Management (BOEM) solicited industry nominations for areas of offshore oil and gas leasing interest in the federal submerged lands under Cook Inlet, consistent with the “2017-2022 National OCS Oil and Gas Leasing Proposed Final Program” (published in November 2016 during the final months of the Obama Administration). This program included a proposed “Lease Sale 258,” which consisted of 224 lease blocks covering over 1 million acres in the northern portion of Cook Inlet (near Homer, Alaska), as shown in the map1. In early 2021, the Biden Administration withdrew the public review period for Lease Sale 258 as part of its nationwide moratorium on new oil and gas leases on public lands or offshore waters. However, in June 2021, a federal district court in Louisiana blocked the Biden Administration’s moratorium nationwide and required the restart of the leasing program. In October of 2022, BOEM published a draft Environmental Impact Statement analyzing the potential environmental impacts of Lease Sale 258 and held a public comment period ending in December 2021. On May 11, 2022, the Interior Department announced via statements to the media that, due to a "lack of industry interest in leasing in the area," the agency had made the decision to "not move forward" with the Cook Inlet lease sale. More information about Lease Sale 258 is available at https://www.boem.gov/oil-gas-energy/leasing/lease-sale-258.
OCS Activity in Gulf of Mexico (Lease Sales 259 and 261)
The 2017-2022 National OCS Oil and Gas Leasing Proposed Final Program also included other potential leasing areas, including Lease Sale 259 and Lease Sale 261 in the Gulf of Mexico. Unlike Lease Sale 258, however, BOEM had not as of yet initiated specific planning activities regarding Lease Sales 259 and 261. In yesterday’s announcement canceling these two Gulf of Mexico lease sales, the Interior Department cites "conflicting court rulings that impacted work on these proposed lease sales." Though not the subject of yesterday’s announcement, it is also worth highlighting the current status of Lease Sale 257, also located in the Gulf of Mexico. BOEM held Lease Sale 257 in November 2021, generating over $190 million in bids for approximately 1.7 million acres (a near record high for a lease sale under the current program). Nonetheless, on January 27, 2022, a federal district court in Washington D.C. vacated Lease Sale 257 after finding that BOEM failed to adequately consider climate impacts. Yesterday’s announcement is significant because, among other things, it signals the end of new lease sales under the current 2017-2022 leasing program, which expires this year. It remains unclear whether or when the Biden Administration will announce a new proposed OCS leasing program for the next five year period.
Other Recent Actions regarding Interior Department Lease Sales
While the Biden Administration is slowing down or canceling new oil and gas leasing activities in offshore areas, the Biden Administration decided last month to press ahead with some lease sales in onshore areas (though that decision was also instigated by court rulings). On April 15, 2022, in response to a court injunction issued by a federal district court in Louisiana last year, the Interior Department announced plans to move ahead with final sale notices for approximately 173 parcels on roughly 144,000 acres of public lands, but with increased royalty rates and additional regulatory reviews and consultation requirements. Onshore areas covered by the April 15 notice are located in Alabama, Colorado, Montana, Nevada, New Mexico, North Dakota, Oklahoma, Utah and Wyoming.
More generally, the Biden Administration continues to implement various recommendations of the Interior Department’s “Report on the Federal Oil and Gas Leasing Program,” which was issued in November 2021 pursuant to President Biden’s Executive Order 14008 (“Tackling the Climate Crisis at Home and Abroad”). A copy of that report is available at https://www.doi.gov/sites/doi.gov/files/report-on-the-federal-oil-and-gas-leasing-program-doi-eo-14008.pdf. As further background, in April 2022, the Congressional Research Service published a helpful summary of the Offshore Oil and Gas leasing program. That CRS report is available at https://crsreports.congress.gov/product/pdf/IF/IF11909.
Please let us know if you have any questions or would like additional information about the federal government’s offshore oil and gas leasing program.
1 Source: US Department of Interior
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