Energy & Environment — Biden officials weigh smaller offshore oil lease sales

Rachel Frazin
·6 min read
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The Biden administration is moving ahead with both offshore and onshore oil and gas leasing but is also considering smaller lease sales than what the Trump administration endorsed. Meanwhile, California is offering to make cuts to its use of Lake Mead, and OPEC’s recent moves are expected to drive up gasoline prices.

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Interior moves ahead with oil and gas lease sales

The Biden administration is considering auctioning off a smaller section of the Gulf of Mexico for drilling than the Trump administration was expected to.

The Interior Department on Thursday released a draft of a “Supplemental Environmental Impact Statement” outlining its plans for the sales of the rights to drill offshore.

But while a separate Environmental Impact Statement released by the Trump administration called for a “regionwide” lease sale, the Biden administration’s document weighs a range of options.

The Biden document does not specify which option the administrtion is most likely to choose, opening the door for a possibly smaller lease sale than the Trump administration would have held.

  • The Biden administration is still considering regionwide lease sales encompassing 84 million acres, but is apparently giving equal weight to smaller alternatives that would encompass 56 million acres or 27 million acres, respectively.  

  • The document also lists canceling the sales as a possible option, but it is unlikely to do so because the Democrats’ Inflation Reduction Act requires it to hold the drilling rights auctions.

What about onshore? The Interior Department also announced additional sales of rights to drill onshore in Wyoming and New Mexico.

In Wyoming, it plans to auction off as many as 251,000 acres between April and June of 2023, while it plans to auction off as many as 10,000 acres in New Mexico next May.

The department said in a press release that it is also considering auctions in other states and expects to announce those “in the coming weeks.”

Read more about the forthcoming sales here.

California offers to cut back Lake Mead water use

California is, for the first time in a series of negotiations, offering to cut back its use of water from Lake Mead next year.

California on Wednesday offered to conserve 400,000 acre-feet, or 130 billion gallons, of water from Lake Mead annually from 2023 through 2026.

“This water, which would otherwise be used by California’s communities and farms, will meaningfully contribute to stabilizing the Colorado River reservoir system,” state water agencies said in a letter to the federal government.

Both water usage and drought, which has been accelerated by climate change, in the west are contributing to shortages in Lake Mead — a Colorado Reservoir in the southwestern U.S. — leaving the region with a need to conserve water.

Quick refresher:

  • Lake Mead provides water from the Colorado River to about 25 million people. The water is used for municipal, industrial and farming purposes.   

  • The head of the U.S. Bureau of Reclamation, a federal agency that’s in charge of the country’s water resources, recently said that the region needs to conserve between 2 and 4 million acre-feet, or at least 651.7 billion gallons of water in 2023 to protect Lake Mead and Lake Powell.

What to make of California’s proposal:

  • Experts have described California’s proposal as both an important step, but also not nearly enough to solve the problem.  

  • “It’s a really good first step and it’s a good sign that things could be moving, but we’re going to need 4, 5, 6, 7 times that amount of water here in the very near future,” said Chris Kuzdas, a senior water program manager with the Environmental Defense Fund.

Read more about California’s offer here.

OPEC+ cuts expected to raise gasoline prices

Production cuts announced this week by a group of oil producing countries known as OPEC+ are expected to drive up U.S. gasoline prices, a development that could pose problems for the Democrats just one month ahead of midterm elections. 

Analysts told The Hill that the decision to cut their oil targets by 2 million barrels per day is expected to send gasoline prices up by between 15 and 25 cents. 

  • Oil prices had already been on the rise ahead of the Wednesday announcement, amid speculation and rumors of a potential cut.  

  • On Thursday, prices for a U.S. benchmark were around $89 per barrel on Wednesday, up from as low as $76 per barrel in late September. The international benchmark was at around $95 per barrel, up from $84 in late September. 

Andrew Lipow, president of Lipow Oil Associates, projected that for consumers east of the Rocky Mountains, this could send prices up by between 15 and 20 cents over the next week to 10 days. 

He added, however, that they may be seeing between a 5 and 7 cent increase already. 

Marianne Kah, an adjunct senior research scholar at Columbia University’s Center on Global Energy Policy, made a more drastic projection, saying that prices could go up about 24 or 25 cents over the next few weeks.

Kah, the former chief economist at oil company ConocoPhillips,  also said that the timeline for price increases may vary across the country.

Lipow limited his projection to just the eastern and central U.S. because the West Coast has been seeing an additional price spike amid temporary refinery outages. 

He said that he expects these prices to fall in the coming weeks as those refineries come back online.

However, he still expects the national average to “tick on up” in light of the OPEC cuts. 

Read more about what’s to come here.

WEST COAST STATES SIGN CLIMATE AGREEMENT

The leaders of California, Oregon, Washington state and British Columbia have signed an agreement to expand the region’s climate partnership — with hopes of accelerating the transition to a low-carbon economy.

  • “We don’t have all the answers. And so we seek to share best practices, we seek to compete,” California Gov. Gavin Newsom (D) said at a Thursday press conference in San Francisco.   

  • “That competition has brought us to where we are today,” the governor continued. “We’re in the how business.”

Newsom gathered with his colleagues Oregon Gov. Kate Brown (D), Washington Gov. Jay Inslee (D) and British Columbia Premier John Horgan to sign the Pacific Coast Collaborative Statement of Cooperation — an updated agreement that recommits the region to climate action.

The renewed partnership will promote investments in climate infrastructure, such as electric vehicle charging stations and a clean electric grid, according to the agreement.

Participating officials also pledged to protect their residents from climate impacts like drought and wildfire, while ensuring that all communities are included in the clean energy transition.

“This is not about electric power,” Newsom said. “This is about economic power. This is about dominating the next big global industry.”

Read more about the agreement here, from The Hill’s Sharon Udasin.

WHAT WE’RE READING

  • Biden Says the U.S. Is Eyeing ‘Alternatives’ to OPEC Oil (The New York Times)

  • 2025 deadline for Chesapeake Bay cleanup could be pushed back, EPA says (The Baltimore Sun)

  • Auditors fall down on climate risk as corporate polluters fail basic tests, study shows (The Financial Times)

ICYMI

That’s it for today, thanks for reading. Check out The Hill’s Energy & Environment page for the latest news and coverage. We’ll see you tomorrow.

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