The American Petroleum Institute (API) is appealing a federal court ruling that invalidated the results of last November’s Gulf of Mexico (GOM) oil and gas lease sale, calling the decision “misguided.”
U.S. District Judge Rudolph Contreras of the District of Columbia (DC) invalidated Lease Sale 257, which was the only federal auction held in 2021 (No. 1:21-cv-02317-RC). Contreras said the Department of the Interior’s Bureau of Ocean Energy Management (BOEM), which oversees the Outer Continental Shelf (OCS) sales, “acted arbitrarily in excluding foreign consumption from its emissions analysis.”
The auction relied on an outdated analysis that was completed by the Trump administration, Contreras noted.
API’s Frank Macchiarola, senior vice president for Policy, Economics and Regulatory Affairs, said the appeal is being made “to preserve American energy leadership and ensure that development in the Gulf of Mexico can continue to play a critical role in meeting the nation’s energy needs, while generating billions in revenue for critical conservation programs.
“At a time of rising energy costs and heightened geopolitical tensions, the misguided decision to cancel the only lease sale held last year is contributing to significant uncertainty for U.S. natural gas and oil producers and limiting access to the affordable, reliable energy that’s needed here in the U.S. and around the world.”
The Interior Department should join the effort to appeal the DC court’s ruling, he said.
A spokesperson for the National Ocean Industries Association (NOIA) told NGI that “there may be the opportunity to file an amicus brief” and join API in the appeal. “Of course, we will be monitoring the case closely,” NOIA’s Justin Williams said.
According to Macchiarola, a “comprehensive environmental analysis,” completed by BOEM as required by the National Environmental Policy Act, included “careful consideration of the emissions impacts of reasonable alternatives.”
He pointed to a report completed by the Obama administration’s BOEM, which analyzed the effects of offshore leasing restrictions. The analysis indicated U.S. greenhouse gas emissions (GHG) would be “little affected and could increase slightly if foreign imports increased in the absence of new U.S. offshore leasing and production.”
The report was completed in 2016 as the proposed roadmap for the five-year OCS leasing program for 2017-2022.
API noted the report said “foreign energy sources would substitute for reduced American offshore supply,” and “increased production and subsequent transport of foreign oil would lead to higher GHG emissions than energy produced here in the United States.”
The BOEM report also noted that “GHGs and their associated impacts occur on a global scale, such that the resulting effects cannot appropriately be isolated for inclusion in the net benefits analysis. Nonetheless, BOEM believes it is in the public interest to disclose the potential climate impacts of OCS leasing decisions as part of its planning processes.”
Nullifying the auction’s results was considered a major victory for environmental groups, which had sought to block the lease sale before it was held. The sale netted nearly $192 million in high bids for 308 tracts across 15,000-plus unleased blocks on 1.7 million acres of the GOM.
Thirty-three exploration and production companies participated, with overall bids totaling $198.5 million. The leases have not yet been awarded.
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