Biden to halt most federal oil, gas leasing

  • Market: Crude oil, Emissions, Natural gas
  • 27/01/21

President Joe Biden today will order his administration to wind down new oil and gas leasing on federal land, as part of a sweeping series of executive orders focused on climate change.

The orders will direct the US Interior Department to pause oil and gas leasing "to the extent possible" and launch a review of all existing fossil fuel leasing and permitting practices on federal land. Biden will also instruct federal agencies to find ways to remove fossil fuel "subsidies," to procure carbon-free electricity and buy zero-emission vehicles, a policy Biden previewed last week.

"These executive orders follow through on President Biden's promise to take aggressive action to tackle climate change," the White House said.

Oil and gas industry groups have raised alarm at the prospect of a federal leasing ban, which they say would destroy jobs and curb output on lands and waters that in 2019 produced 2.7mn b/d of crude.

It remains unclear if the "pause" on leasing would eventually be lifted, and how much leasing might still go forward because of legal requirements to regularly hold lease sales. The White House has yet to release the full text of the order, which would not apply to tribal lands.

The federal leasing ban could have the most pronounced long-term effect on offshore development, although it would not affect existing operations or drilling permits that are acquired years in advance. The government controls the entire US Gulf of Mexico beyond state waters close to the shoreline, meaning the offshore sector's alternative option for new leasing would be to relocate overseas.

"If a ban goes on too long, and those investments go overseas, then we start seeing immediate drying up of service company partners," Louisiana Association of Business and Industry president Stephen Waguespack said.

Industry groups say a leasing ban will disrupt economic activity and create billion-dollar budget gaps in states like New Mexico, Colorado and Wyoming, where federal production has boomed over the last decade. Even a temporary leasing ban might have long-term effects, as operators shift investment budgets or lose the advance time necessary to acquire drilling permits.

"It is not like renting a car. There is a lot of work that goes in ahead of time," Independent Petroleum Association of America government relations senior vice president Dan Naatz said.

The moves align with Biden's campaign promise to ban federal fossil fuel leasing and, instead, use the government's massive land holdings to support renewable energy. Biden, through the order today, will also ask his administration to identify steps to double offshore wind output by 2030 and find new ways to spur innovation of clean energy technology and infrastructure.

But the orders curtailing oil and gas development risk undercutting Biden's attempts to revive the economy, particularly blue-collar jobs common in pipeline construction and oil production. Biden today will also create a working group to assist communities that depend on fossil fuel production, including a push to remediate existing and abandoned wells and mining sites.

Environmentalists were jubilant at the orders, which came after years of trying to make action on climate change a core focus of the government. They say continuing federal leasing would effectively lock in decades of production, making it impossible for the US to reach ambitious goals on reducing greenhouse gas emissions.

Industry groups have promised a massive legal fight if the leasing moratorium goes forward. They intend to argue that while the executive branch has some discretion on leasing, trying to pause all leasing would conflict with laws like the Mineral Leasing Act, under which the US Congress sought to encourage energy development on federal lands through quarterly lease sales.


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Germany to stop gas storage levy on transit from 2025

Germany to stop gas storage levy on transit from 2025

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