The US Interior Department will auction vast oil and gas reserves in the Gulf of Mexico on Wednesday, with reserves estimated to hold up to 1.1 billion barrels of crude, the first such auction under President Joe Biden and a foreshadowing of the challenges he faces in meeting climate goals that require deep cuts in fossil fuel emissions.
Energy corporations were allowed to bid on drilling leases across 136,000 square miles (352,000 square kilometers) — roughly twice the size of Florida — in a live-streamed auction.
Companies will have to wait years for the leases to be developed before they can begin pumping crude. That means they might continue to produce well beyond 2030 when experts say the world must be well on its way to reducing greenhouse gas emissions in order to avert catastrophic climate change.
The auction comes after a federal judge dismissed a moratorium of fossil fuel sales that Biden imposed when he took office, according to a complaint filed by Republican states.
According to the US Geological Survey, coal accounts for nearly a quarter of all carbon emissions in the United States, thus the Democrats campaigned on vows to ban fossil fuels from public lands and waters. Despite his efforts to persuade other world leaders to increase worldwide efforts to combat global warming, Biden’s failure to win traction on climate concerns at home is demonstrated by Wednesday’s sale.
Last week, the Trump administration proposed a new round of oil and gas lease sales in Montana, Wyoming, Colorado, and other western states in 2022. Despite the fact that officials at the Interior Department concluded that burning the fuels could result in billions of dollars in potential future climate damages, they went ahead with the project.
“We had Trump’s unrestricted approach to oil and gas development on public lands, as well as Biden’s early attempt to halt drilling.” According to Columbia University’s Center for Global Energy Approach researcher Robert Johnston, “it appears that the Biden administration is trying to develop a new policy.”
He went on to say, “They’re very concerned about undercutting their delicate momentum” on climate concerns.
In pre-sale documents posted Tuesday, the energy agency said it received bids on 307 lots totaling over 2,700 square miles (6,950 square kilometers). Since Gulf-wide bidding resumed in 2017, this is the highest total for a single transaction. The previous seven auctions brought in about $1 billion in total revenue.
The newest sale’s environmental studies, done under former President Donald Trump and confirmed by Biden, came to an unexpected conclusion: extracting and burning the gasoline would emit fewer greenhouse gases than leaving it alone.
Environmentalists challenged similar claims in two other cases in Alaska, and federal judges rejected them. In one of the instances, judges highlighted climate scientist Peter Erickson’s study, and he argued the Interior Department’s research had a major flaw: it ignored greenhouse gas rises in other countries as a result of additional Gulf oil entering the market.
“On this kind of stuff, the arithmetic is pretty straightforward,” said Erickson, a senior scientist with the Stockholm Environment Institute, a non-profit research organization. “Expanding the global oil supply through new leases has a commensurate effect on emissions from burning oil.” As a result, awarding these leases in the Gulf of Mexico would result in an increase in world emissions.”
The Bureau of Ocean Energy Management of the Interior Department has revised its emissions modeling methodologies, citing Erickson’s findings. Officials said it was too late to apply that strategy for the auction on Wednesday.
Interior is doing a more complete emission analysis than any previous administration, according to spokesman Melissa Schwartz, for prospective sales. It’s also contesting the court order forcing them to resume.
Because drilling for oil in other parts of the world is less economical and shipping imports add to carbon costs, Erik Milito, president of the National Ocean Industries Association, is skeptical that employing the new approach would have changed the government’s results.
The use of the outdated study irritates drilling opponents who claim Biden isn’t keeping his promises on climate change.
“We’re talking about shifting away from a fossil fuel economy, and they’re selling a gigantic carbon bomb of a lease sale,” said Earthjustice attorney Drew Caputo, who is suing the Gulf auction in federal court.
The deal was also opposed by some Democrats. Raul Grijalva, chairman of the House Natural Resources Committee, said Biden “has to do better” after vowing to lead on climate concerns while continuing a fossil fuel program with a long history of mismanagement.
The Gulf of Mexico produces around 15% of all crude oil and 5% of all-natural gas in the United States.
Since oil prices have risen considerably over the last year, industry analysts predicted increased interest in Wednesday’s sale. It’s also an opportunity for corporations to obtain drilling rights before the government or Congress raises drilling costs and royalty rates, according to Wood Mackenzie analyst Justin Rostant.
“Various firms have different tactics and approaches,” Rostant explained. “Some may believe that this is the year to go big.”
