US set for extended pause on oil, gas leasing

President Joe Biden's administration says recent court rulings have made it unable to resume onshore oil and gas leasing this quarter or reschedule a canceled lease sale in the US Gulf of Mexico.

The extended hold on leasing, confirmed in court filings this week, has frustrated oil and gas groups who say restarting leasing could offer an assuring sign to global energy markets rattled by Russia's invasion of Ukraine. But the administration says its options are limited, as oil-producing states and environmentalists challenge its energy policies in court.

The administration said it is now too late to re-hold offshore Lease Sale 257, which had raised $192mn before it was thrown out on 27 January by a federal judge who found flaws with an underlying climate review. Even if a new review were ready, the US Interior Department said it cannot finish other required steps before its existing five-year offshore leasing program expires on 30 June.

"The absolute earliest a new Lease Sale 257 could occur is July 2, which is after the expiration of the current five year program," Interior said in a 28 February court filing.

Interior's Bureau of Land Management (BLM) also said it cannot resume onshore leasing this quarter for federal land in New Mexico, Colorado, Wyoming and other states. BLM said it was on schedule to meet a 14 February deadline to hold those sales this quarter, until a judge recently blocked the agency from relying on a calculation named the "social cost of carbon" in all of the environmental studies underlying the sales.

"Because the injunction against relying on [the social cost of carbon calculation] issued on 11 February, BLM was unable to revise its [environmental] analyses in light of the injunction in time to issue sale notices for the first quarter of 2022," BLM said in a court declaration on 25 February.

It remains unclear how soon the Biden administration could resolve the court issues and resume leasing. The administration is appealing the social cost of carbon ruling, but a decision could take months.

Interior separately said on 28 February it would not appeal the ruling throwing out Lease Sale 257, but noted it could reinstate the affected leases if an appeal brought by the oil industry succeeds. Even so, any new leasing in the Gulf of Mexico is unlikely this year because of the 30 June cutoff and the extended time it will take to issue a replacement five-year offshore leasing plan.

Oil industry groups are pushing the Biden administration to resume oil and gas leasing, despite uncertainty with the social cost of carbon. The American Petroleum Institute last week urged US interior secretary Deb Haaland to prioritize resuming quarterly onshore lease sales and issue a new five-year offshore leasing program.

"We believe there are ways [Interior] can analyze and communicate the effects of federal actions on climate change without monetizing the effects and without using the [social cost of carbon] that will not burden the agency and allow it to complete its obligations," American Petroleum Institute chief executive Mike Sommers said.

By Chris Knight