West News Wire: In a sale required by the compromise on the climate bill from last year, oil firms on Wednesday put up a combined bid of $264 million for drilling rights in the Gulf of Mexico.
The auction, which attracted attention from major players in the industry like ExxonMobil, Shell, and Chevron, was the first in the Gulf in more than a year. It might put to the test once more the allegiance of youth voters and environmentalists who supported Joe Biden for president in 2020 but were angered by this month’s approval of the massive Willow drilling project in northern Alaska.
Developing the leases for sale in public waters in the Gulf of Mexico could produce more than 1 billion barrels of oil and more than 4 trillion cubic feet (113 billion cubic meters) of natural gas over 50 years, according to a government analysis. Burning that oil would increase planet-warming carbon dioxide emissions by tens of millions of tons, the analysis found.
Winning bids Wednesday were 38% higher than the last auction and marked the most received since Gulf-wide bidding resumed in 2017. The amount of acreage receiving bids was comparable to 2021.
There’s another Gulf lease sale scheduled in September. It’s unknown how many more the administration could conduct, which could hinder companies’ expansion plans.
Yet analyst Sami Yahya said approval of the ConocoPhillips Willow project in the National Petroleum Reserve-Alaska bodes well for the industry and prospects for future leasing.
“It showed that the Biden administration is likely trying to strike a balance between energy transition and energy security,” said Yahya with S&P Global.
The Department of Interior sale comes two days before a deadline set in last year’s climate bill that Biden signed into law.
The measure prohibited leasing public lands for renewable power unless tens of millions of acres are first offered for fossil fuels. That was a concession to get support from West Virginia Democrat Joe Manchin, a fossil fuels industry supporter.
The climate law also raised the royalty rate companies must pay on oil they produce. The Biden administration set the rate for Wednesday’s sale at the maximum allowed 18.75%, versus 12.5% historically yet that did not appear to curb interest.
Sea level rise is a factor in Louisiana’s steady loss of coastal wetlands, which in addition to harboring a variety of fisheries and wildlife, provide a buffer between inland population areas and hurricanes that scientists say are growing stronger as the world warms.
