Agency OKs nearly $190M in bids from offshore oil lease sale

Sep 14, 2022, 11:35 AM | Updated: 9:23 pm
FILE - In this July 13, 2017, photo released by the U.S. Bureau of Safety and Environmental Enforce...

FILE - In this July 13, 2017, photo released by the U.S. Bureau of Safety and Environmental Enforcement, an oil industry facility in the Gulf of Mexico is seen. The U.S. government has accepted nearly $190 million in bids from an offshore oil and gas lease sale that was held nearly a year ago but rejected by a federal judge, the Bureau of Ocean Energy Management said Wednesday, Sept. 14, 2022. (U.S. Bureau of Safety and Environmental Enforcement via AP, File)

(U.S. Bureau of Safety and Environmental Enforcement via AP, File)

NEW ORLEANS (AP) — The Biden administration accepted nearly $190 million Wednesday in bids from an offshore oil and gas lease sale that was held nearly a year ago but rejected by a federal judge.

The Bureau of Ocean Energy Management’s action was required by the climate bill that was signed Aug. 16 — a disappointment to environmentalists who worry about the climate impacts of offshore drilling, but praised by industry as a return to longstanding practice after an 18-month delay imposed by the Biden administration.

The bill had a 30-day deadline for accepting the bids. It also requires the bureau to reschedule three sales that had been put on hold by a moratorium ordered by President Joe Biden, with the first of them to be held by Dec. 31.

“We are pleased that the Department of the Interior has finally offered the first offshore leases of this administration, but it is disappointing that it took 19 months and an act of Congress to get us to this point,” said Cole Ramsey, vice president of upstream policy for the American Petroleum Institute.

The Bureau of Ocean Energy Management said Wednesday that it had accepted 307 valid high bids totaling just under $189.9 million from the November 2021 sale “in compliance with congressional direction.” Companies bid on about 2% of the tracts offered for sale in the Gulf of Mexico.

“Leases resulting from this sale include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential ocean user conflicts,” the agency said in a news release.

U.S. Sen. Joe Manchin, the West Virginia Democrat who got the lease sale provisions into the law, said, “Our federal oil and gas leasing programs are critical to American energy security, and these offshore leases will provide the market signals necessary to help ease the pain Americans are feeling from record inflation and high energy prices.”

Miyoko Sakashita, director of the oceans program at the Center for Biological Diversity, an environmental nonprofit, called the congressional order a huge disappointment.

“Congress just gave the greenlight to a lease sale that was found unlawful. That’s a serious blow to our climate and Gulf ecosystems, which have already suffered so much from oil industry pollution,” she said.

The judge’s order in February said the Biden administration had failed to adequately consider the sale’s effect on planet-warming greenhouse gas emissions. U.S. District Judge Rudolph Contreras in Washington said Interior could decide whether to scrap the sale, undertake a fresh review or take other steps.

The National Ocean Industries Association, which represents offshore energy companies, said, “Communities along the Gulf Coast and throughout the country rely upon Gulf of Mexico oil and gas development for good-paying jobs, affordable energy supplies, and important funding for local infrastructure needs, coastal restoration and resiliency, and parks and recreation programs.”

The previous lease sale, in November 2020, had brought $120.9 million in high bids on 93 tracts. Seven of those bids, totaling $9.3 million, were rejected as too low.

In a separate action, the Center for Biological Diversity asked the Environmental Protection Agency on Wednesday to forbid companies to discharge fracking waste into the ocean.

It said trade-secret protections in current rules for permits governing oil industry discharges into the Gulf of Mexico mean EPA “often does not know what chemicals are used.”

As of 2016, it said, EPA had identified nearly 1,100 chemicals used in hydraulic fracturing and more than 500 found in water that comes up with oil and gas. The agency “has little to no information regarding the impacts of many of these chemicals on human and marine environments,” it said.

A proposed new permit for the western Gulf of Mexico “would allow more of the same,” the organization said in public comments about a two-year industry study to assess discharges.

The climate bill’s requirement for offshore lease sales is likely to increase offshore drilling and fracking, the group said.

“With offshore drilling set to surge, the Biden administration needs to stop oil and gas companies from poisoning the Gulf of Mexico with fracking waste,” Kristin Carden, a senior scientist at the center, said in a news release.

National Ocean Industries Association President Erik Milito responded, “This is a complete misunderstanding of offshore production processes and does not reflect the actual science and engineering behind how U.S. offshore oil and gas is actually produced. Performance-based limits provide strict controls on the fluids that are discharged and ensure a sound, risk-based approach to protecting the environment.”

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Agency OKs nearly $190M in bids from offshore oil lease sale