Natural gas and oil lease sales in the Gulf of Mexico (GOM) should continue, but there’s room for wind development, as well as carbon capture and sequestration (CCS), according to exploration and production (E&P) companies.
Both supporters and opponents of federal leasing in the offshore made their comments on the national leasing program, published late last month, following a request by the Department of Interior’s Bureau of Ocean Energy Management (BOEM). The Biden administration’s 2024-2029 National Outer Continental Shelf (OCS) Oil and Gas Leasing Program was finalized last year. It has scheduled one auction each for 2025, 2027 and 2029.
BOEM is using Area Identification, or Area ID, to develop a recommendation for the areas when considering leasing and environmental analyses.
Based on the preliminary findings, BOEM plans to continue analyzing “all available blocks” in Area ID. A letter detailing the decision was sent by BOEM’s James Kendall, regional director of the New Orleans office, and Megan E. Carr, chief of the Office of Strategic Resources.
The recommendation constitutes an area for leasing of about 17,518 whole and partial blocks in the GOM that cover more than 94 million acres.
“Maintaining sufficient acreage for oil and gas leasing” would ensure that BOEM meets the requirements within the Inflation Reduction Act (IRA), the letter noted. IRA required that there be “at least 60 million acres for oil and gas leasing in the previous year to allow for the continued issuance of wind energy leases. This recommendation helps meet that goal and reduces risk to BOEM's future planned wind leasing activities.”
The decision does not mean that BOEM would allow regionwide leasing, nor is it a “prejudgment…on how or whether to proceed” with the lease sales, officials noted. “The Area ID simply determines which areas identified in the call will receive further consideration and analyses.”
Auctions ‘Stabilize Energy Markets’
E&Ps and other supporters “strongly encouraged BOEM to conduct the three proposed lease sales as regionwide sales,” the Interior agency noted. A region-wide approach, supporters said, “would help stabilize energy markets and supplies over time, generate jobs and offer industry greater flexibility to adapt to changes in energy markets, evolving technologies, and exploration and geologic trends over the five-year leasing program.”
A “targeted” leasing model, to only auction parts of the GOM, “was highly discouraged in comments from industry and industry groups,” according to BOEM. Some supporters “highlighted the GOM's longstanding history as demonstrating that oil and gas activities can effectively coexist with a multitude of other uses.
“Rather than removing acreage, industry commenters expressed the view that effective mitigation measures can successfully be employed to minimize any potential impacts.”
For example, Shell plc subsidiary Shell Offshore Inc., which oversees the most activity in the GOM, encouraged BOEM to follow the minimum acreage offering requirement “to support future OCS offshore wind sales. BOEM also should hold “at least one sale in the GOM per year to better facilitate future wind leasing.”
BOEM also should “encourage multiple uses” on a gas and oil block, such as including CCS projects. In addition, federal officials should follow the “legally required process to designate endangered species and their habitats.”
BP plc, another top U.S. offshore explorer, encouraged BOEM to consider new lease award procedures, such as offering a tract to “the second highest bidder” if the highest bidder does not pay the full amount required.
Chevron Corp. in its comments touted its operational history of cooperating with other stakeholders. To that end, the U.S. major said, “some areas should not be separated by use, but shared.”
Chevron often develops large offshore tracts and platforms with other operators. The San Ramon, CA-based firm, like Shell, also pushed for “multi-use blocks” in the offshore to develop CCS.
Meanwhile, the National Ocean Industries Association, which represents the offshore industry, urged Interior to terminate “regressive energy policies” and “return to business as usual.”
Before finalizing an auction, BOEM still needs to complete environmental analyses as required by the National Environmental Policy Act. In addition, it must have consultations and allow affected parties to comment.
Groups that opposed holding any oil and gas lease sales or recommended that BOEM phase out or limit the size of sales included Earthjustice, Friends of the Earth, Natural Resources Defense Council, Sierra Club and Oceana.
“Their comments recommended limiting the size of lease sales via a targeted leasing approach and excluding areas of potential conflict,” including future wind leasing and critical habitat.
