Home Office to resume oil and gas leasing and charge higher fees

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As pressure mounts on the Biden administration to lower fuel prices, the Interior Department on Friday announced plans to hold its first onshore oil and gas lease sales since President Biden took office. .

The department said it plans to open about 144,000 acres for lease next week and will charge oil and gas companies higher royalties to drill on federal lands, raising fees for the first time. According to plans unveiled on Friday, royalty rates would rise from 12.5% ​​to 18.75% for sales of oil and gas concessions.

The long-awaited announcement follows a report released by the department last fall, which called for royalties to be more in line with the higher rates charged by most private landowners and major oil and gas producing states.

The Biden administration’s willingness to move forward with oil and gas leasing has angered climate activists, who have called the department’s plans a betrayal of the president’s pledge to ban new boreholes on public lands.

According to the latest report from the UN’s Intergovernmental Panel on Climate Change, released last week, the world is on track to exhaust its remaining “carbon budget” by 2030 – setting the ambitious target to keep warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit). ) out of reach. Drilling on federal lands and offshore is responsible for nearly a quarter of US greenhouse gas emissions.

“This is pure climate denial,” Jeremy Nichols, climate and energy program director for WildEarth Guardians, said in a statement. “While the Biden administration talks a good conversation about climate action, the reality is that it’s in bed with the oil and gas industry.”

Interior officials described the pending lease sales as a significantly scaled-down version of what could have been, describing it as a pragmatic approach. In a press release, they noted that the acreage offered for auction was 80% less than the 733,000 acres of land in nine states that oil and gas companies had designated.

“For too long, federal oil and gas leasing programs have prioritized the needs of the extractive industries above local communities, the natural environment, the impact on our air and water, the needs tribal nations and additionally other uses of our shared public lands,” Secretary Deb Haaland said. “Today we are beginning to reset how and what we consider the highest use and the best of American resources for the benefit of all present and future generations.”

The department’s plans are the latest example of the political tightrope the president is trying to walk. Since Russia’s invasion of Ukraine sent oil prices soaring, Biden has come under pressure to ease the pain Americans are feeling at the pumps. He urged US oil companies to increase production and released millions of barrels of oil from the strategic petroleum reserve to compensate for the loss of Russian oil on world markets.

Earlier this week, the Environmental Protection Agency announced plans to allow the sale of petrol blended with higher levels of ethanol during the summer, lifting a ban first put in place amid fears that burning fuel rich in ethanol during the summer heat does not aggravate smog.

Yet at the same time, the administration is wary of alienating progressive Democrats and climate activists and has tried to portray its enthusiasm for oil and gas production as a necessary — and temporary — response to water shortages. supply as it strives to develop cleaner sources of energy.

As a candidate, Biden pledged to ban new oil and gas drilling on federal lands. But in June 2021, U.S. District Judge Terry A. Doughty in Louisiana overturned the executive order temporarily suspending drilling, dealing a blow to the president’s plans to reduce greenhouse gas emissions from fossil fuels. The power to suspend oil and gas leasing belongs “solely to Congress,” Doughty wrote.

Last year, Interior held the largest offshore oil and gas lease sale in the country’s history, auctioning more than 1.7 million acres in the Gulf of Mexico. A federal judge later struck down those leases, citing a flawed environmental analysis conducted under the Trump administration. At the time, Biden administration officials said they could have been held in contempt of court if they hadn’t made the sale, a legal interpretation that many conservationists criticized. .

“It’s important that they increase royalty rates,” said Abigail Dillen, president of Earthjustice. “But ultimately, leasing oil and gas on a significant scale is inconsistent with the Paris Agreement.”

Since most oil and gas production takes place on private and public lands, experts said there was little evidence the Biden administration’s action would lower prices. Even if energy companies sign new leases in the coming months, it can take years to drill new wells and ramp up production.

The U.S. oil industry on Friday slammed Biden officials for cutting the size of lease sales and raising royalty rates.

In an email, Kathleen Sgamma, president of the Western Energy Alliance, an oil and gas trade group, said forcing companies to pay higher drilling fees would lead to lower production, undoing efforts. administration to lower prices.

“Although we are happy to see [the Bureau of Land Management] will finally announce sales,” Sgamma wrote, “the extreme reduction in acreage of 80%, after a year and a quarter without a single sale, is unjustified and in no way shows that the administration takes the high prices of gasoline.

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