Administration awards Gulf of Mexico drilling leases to oil giants

The Biden administration on Wednesday reinstated $190 million worth of leases to companies bidding to explore for oil and gas in the Gulf of Mexico, despite widespread concerns about accelerating climate change.

The Bureau of Ocean Energy Management granted the 307 oil and gas leases as part of a compromise that won support last month from Sen. Joe Manchin III (D-W.Va.) for the Inflation Reduction Act and its roughly $369 billion in climate-related spending and tax credits.

The Lease Sale 257, which had been held in November 2021, had been invalidated by a federal judge in February.

On Wednesday, the Biden administration sought to stress that the sale would “protect biologically sensitive resources, mitigate potential adverse effects on protected species and avoid potential ocean user conflicts.”

Gulf of Mexico federal offshore oil production accounts for 15% of total U.S. crude oil production and federal offshore natural gas production in the Gulf accounts for 5% of total U.S. output, according to the Energy Information Administration. And the gulf was the scene of the massive Deepwater Horizon oil spill in 2010, a rig that was operating on behalf of BP.

Chevron submitted the highest sum of winning bids at $47 million. Other major successful bidders included Anadarko, BP, Shell and ExxonMobil.

The Inflation Reduction Act specifies how the administration should deal with lease sales in the Gulf of Mexico. It instructs the administration to hold another lease sale for oil and gas alone. Subsequently, the bill says, there will be sales of oil and gas leases coordinated with lease sales of renewable energy from wind turbines.

Democrats have been divided over oil and gas lease sales with President Biden, House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Charles E. Schumer (D-NY) all supporting them as part of the compromise with Manchin.

“What we’re trying to do is accentuate the good things about the bill while trying to stop the things that undercut the longer term climate issues,” said Athan Manuel, offshore drilling expert with the Sierra Club. “It is a difficult needle to thread.”