US freezes new federal drilling permits: Update

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President Joe Biden's administration has temporarily halted the standard approval of new drilling permits and leases across federal lands, drawing outcry from industry groups.

The 60-day suspension on approvals is necessary for a "targeted and time-limited" review of recent decisions, the US Interior Department's acting secretary Scott de la Vega said in an order signed yesterday. The freeze will apply to drilling permits, leases, easements and federal land management plans.

The Biden administration has retained the option to approve some permits and leases, but only with explicit approval of nine top appointees at the Interior Department. The order effectively takes the US Bureau of Land Management, which has field offices in oil-producing states, out of its standard role of handling day-to-day permitting and leasing decisions.

US producers that hold federal leases will still be allowed to continue drilling wells using the more than 5,600 unused drilling permits they amassed over the past two years. That will likely avoid most near-term disruptions to operations. Oil and gas producers typically acquire permits months before drilling crews begin operations, to avoid the risk of disruptions and to aid in planning.

Biden during his presidential campaign promised to "ban" new oil and gas drilling permits and halt new federal fossil fuel leasing. But the administration will need to figure out a way to achieve that goal, while still complying with laws that generally support production. Oil output on federal lands and waters averaged 2.7mn b/d in 2019, representing 22pc of domestic production.

Oil and gas groups have strongly opposed Biden's plans to constrain the industry's access to federal lands, which cover nearly all offshore acreage and a fifth of the US landmass. Halting federal development will hurt the economy and increase reliance on energy imports, they say.

"Blocking American companies from accessing our country's natural resources is bad for American jobs, bad for state budgets and bad for national security," American Exploration and Production Council chief executive Anne Bradbury said.

Former president Barack Obama's administration in 2016 put a "temporary" moratorium on new coal leasing that remained until Trump repealed it more than a year later. Oil groups say a similar strategy is likely, with the temporary freeze being a precursor to a longer-term ban.

"We fully expect the acting [Interior] secretary will indeed not fulfill his duties under the Mineral Leasing Act and the Energy Policy Act, and are prepared to challenge this intended ban in court at the appropriate time," Western Energy Alliance president Kathleen Sgamma said.

By Chris Knight