Biden’s pledge may sink offshore drilling
WASHINGTON — For close to a century, the Gulf of Mexico’s offshore oil and gas industry has pumped vast wealth into the economies of coastal Texas and Louisiana— all under the management of the federal government.
But the Gulf and other federally controlled oil regions across the western United States are facing an uncertain future under President-elect Joe Biden, who has pledged to halt oil and gas leasing on federal lands and waters in a bid to fight climate change.
Even if Republicans retain control of the Senate, Biden will have executive authority over federal lands and the Outer Continental Shelf. Should he carry through on his campaign promise, his administration would begin winding down the Gulf of Mexico’s offshore industry, along with drilling operations in states with an abundance of federally controlled land, such as Colorado and New Mexico.
Since winning the election earlier this month, Biden has not said if, when and how he will carry through on his campaign pledge. But with the Democrats’ progressive wing increasingly vocal about climate change, many in Washington are expecting he will move ahead.
“Presidents usually try to fulfill their campaign promises, so I think we’ll be surprised how much he does,” said Ben Cahill, a senior fellow at the Center for Strategic and International Studies, a Washington think tank from which oil companies have long taken advice. “Stopping offshore leasing is part of a long-term pivot on climate and energy for the Biden administration. It’s about signaling they will reduce dependence on the oil and gas sector.”
Biden’s push to address climate change is already drawing politi--
cal pushback in Washington.
President Donald Trump is moving to hamstring Biden’s environmental agenda with a series of rules to further weaken U.S. environmental protections before he leaves office in January. On Monday, the administration announced it would soon auction off oil and gas leases in Alaska’s Arctic National Wildlife Refuge — 19 million acres of mostly untouched wilderness where Biden has opposed development.
The Biden transition team did not respond to multiple requests for comment.
A Biden halt in leasing would accelerate what is believed to be an inevitable decline in oil and gas production in the Gulf of Mexico after a century of steady drilling. A recent report by research firm Wood Mackenzie found that if leasing were halted, production in the Gulf would hold relatively steady until 2027 before dropping off. By 2035, output would fall to 1.5 million barrels a day, 30 percent less than it would be otherwise.
Even at today’s low prices, the Gulf of Mexico’s offshore oil industry generates almost $30 billion a year in revenues, spurring oil and gas lobbyists in Washington to try to hold off a halt on leasing.
Erik Milito, a longtime energy
lobbyist and president of the National Ocean Industries Association, said he has warned the incoming administration that more than 300,000 jobs are at stake. At a time when millions of Americans remain out of work because of the coronavirus pandemic, Milito said he remained hopeful that Biden wouldn’t carry through on his pledge to halt leasing.
“In the conversations we’ve had with individuals working with the (Biden) campaign, they understand the consequences of a leasing ban,” he said.
Trump’s fight
The debate around federal leasing comes amid numerous signs that climate change is al
ready making the planet less hospitable, with increased hurricanes in the Gulf of Mexico and Atlantic Ocean and record wildfires throughout the western United States. Scientists are warning that conditions will only become worse as temperatures rise through the end of the century, creating the potential for mass crop failures and water shortages.
That is bringing increased political pressure on Biden to act.
The World Resources Institute, a Washington nonprofit that works with governments and companies on reducing emissions, is calling for Biden to set a target of a 45 percent to 50 percent reduction in greenhouse gas emissions by 2030 when he rejoins the Paris agreement on climate change, as he’s promised to do
The terrain has fundamentally shifted since Biden was last in the White House. Other G-20 countries are stepping up. China’s set a target to zero out emissions before 2060,” said Helen Mountford, vice president for climate and economics at WRI. “Joe Biden will only have a short honeymoon to catch up.”
Biden’s plan
Biden is already setting the goal of getting the United States on the path to net-zero emissions by 2050, in line with what scientists say is necessary for the world to limit the rise in global temperatures to 2 degrees Celsius and avoid environmental disaster.
Curtailing oil and eventually natural gas production would be critical to achieving the net-zero goal. American oil and gas output grew steadily over the last decade with the advent of hydraulic fracturing and horizontal drilling, which unlocked deposits long thought too difficult to access economically and drove U.S. oil production to a record 13 million barrels a day before the pandemic hit earlier this year.
The president-elect is likely to face a tough fight from the U.S. oil industry, which draws about 20 percent of its production from federal lands and waters.
Cutting off leasing on federal lands could be especially devastating. Fracked wells, which make up the bulk of U.S. drilling operations, yield most of their oil and gas in the first three years, requiring constant drilling of new wells to maintain production.
“If you don’t keep developing new wells, production falls off a cliff,” said Kathleen Sgamma, president of the Western Energy Alliance, an oil and gas trade group. “An executive order to ban leasing or fracking on federal lands would be a nonstarter (for the industry). We would be in court within hours of such an order.”
Whether the president has authority to stop lease sales remains a matter of contention, with industry attorneys arguing federal law — which can be changed only with congressional action — requires lease sales four times a year. Should Biden go ahead without Congress, hewould likely face a long legal fight likely to end up in the Supreme Court.
In the meantime, plenty of people within the energy industry remain convinced it will not come to that.
“The smart money is Biden does not seek to go too far,” said Stephen Brown, a former oil lobbyist who now works as an energy consultant, with clients that include oil companies and renewable energy firms.