Biden Expected to Ban New Oil and Gas Leases on Federal Land

Posted: Jan 27, 2021 9:20 AM
Biden Expected to Ban New Oil and Gas Leases on Federal Land

Source: AP Photo/Evan Vucci

After canceling the Keystone XL Pipeline as one of his first acts as president, President Biden will now turn his attention to oil and gas leasing on federal land, which he is expected to suspend in an executive order on Wednesday.

The order will only apply to new leases, not existing ones.

On the campaign trail, Biden vowed to “transition away from the oil industry,” arguing that it must be “replaced by renewable energy over time.”  

Industry leaders say his efforts so far are stifling the ability of oil and gas industries to operate. 

“The early actions of the administration are unilaterally shutting down and restricting the ability of American oil and gas producers to run their operations,” Anne Bradbury, chief executive of the American Exploration and Production Council, told The Wall Street Journal. “The scope and the lack of consultation with industry stakeholders has been alarming.”

Drilling on federal lands accounts for roughly 9% of U.S. onshore production, but oil industry leaders see a curtailment on future development as a significant threat. Oil companies want to maximize their access to land and federal permits to help grow and sustain operations, and they plan to resist Mr. Biden’s efforts through lawsuits and lobbying Congress. [...]

How much the Biden administration can limit access to offshore oil and gas, and drilling on federal lands, may ultimately be decided by the courts, according to the analysis firm ClearView Energy Partners LLC. (WSJ)

Towards the end of President Trump's term, the oil industry prepared for such a move by acquiring a number of permits, particularly in New Mexico. 

Federal permitting in New Mexico—a hotbed of Permian Basin drilling on federal land—more than tripled from 2017 to 2020; offshore permitting rose sharply starting in August, and by December had doubled from February, the firm said.

That will delay the biggest impacts for five years or more, the firm said. As current leases expire and exploration slows, annually the U.S. will lose upwards of 300,000 barrels of day in expected production, but peaking after 2031, according to Rystad’s estimates. (WSJ)

The ban on new oil and gas leasing on federal land is part of a series of executive orders Biden is expected to issue Wednesday that will tackle climate change.