Following climate talks, US holds massive crude sales in the Gulf

Following climate talks, US holds massive crude sales in the Gulf

New Orleans The US Department of the Interior will auction on Wednesday huge oil and gas reserves in the Gulf of Mexico estimated at up to 1.1 billion barrels of crude, in the first such sale under President Joe Biden and a harbinger of the challenges he faces in reaching climate goals. That relies on significant reductions in fossil fuel emissions.

The direct sale invited energy companies to bid on drilling leases across about 136,000 square miles (352,000 square kilometers) — about twice the size of Florida.

It will take years to develop the lease contracts before companies start pumping crude oil. That means they can continue to produce well beyond 2030, when scientists say the world needs to be on track to reduce greenhouse gas emissions to avoid catastrophic climate change.

The auction comes after a federal judge, in a lawsuit brought by Republican states, rejected the suspension of fossil fuel sales that Biden had imposed when he took office.

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The Democratic Party has campaigned on promises to reduce fossil fuels from public lands and waters, which include coal responsible for about a quarter of US carbon emissions, according to the US Geological Survey. Yet even as he tries to persuade other world leaders to bolster international efforts against global warming, Wednesday’s sale illustrates the difficulties Biden faces in gaining ground on climate issues at home.

The administration last week proposed another round of oil and gas lease sales in 2022, in Montana, Wyoming, Colorado, and other western states. Home Office officials continued to move forward despite concluding that burning fuel could lead to billions of dollars in potential climate damage in the future.

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“We had Trump’s unconstrained approach to dealing with oil and gas on federal lands and Biden’s early attempt to pause drilling. It now appears that the Biden administration is trying to find a new policy,” said researcher Robert Johnston of the Columbia University Center for Global Energy Policy.

“They are very careful about undermining their fragile momentum” on climate issues, he added.

The Office of Energy said in presales documents released on Tuesday that it had received bids for 307 lots totaling about 2,700 square miles (6,950 square kilometers). This is the largest single sale total since bidding resumed in the Gulf region in 2017. The previous seven sales generated nearly $1 billion in total revenue.

Environmental reviews of the recent sale — conducted under former President Donald Trump and confirmed under Biden — came to an unlikely conclusion: Extracting and burning the fuel would do less greenhouse gases than it left.

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Similar claims have been rejected in two other cases, in Alaska, by federal courts after appeals from environmentalists. Citing the work of climate scientist Peter Erickson in one case, the judges said the Home Office analysis contained a stark omission: It excluded increases in greenhouse gases in foreign countries that result from more Gulf oil entering the market.

“The math is very simple in this kind of thing,” said Ericsson, a senior scientist at the Stockholm Environment Institute, a nonprofit research group. “If new leases expand global oil supplies, it will have a relative impact on emissions from burning oil. So, Granting these leases in the Gulf of Mexico will increase global emissions.”

The Department of the Interior’s Office of Ocean Energy Management recently changed its emissions modeling methods, citing Ericsson’s work. Officials said it was too late to use this method at Wednesday’s auction.

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For upcoming sales, company spokeswoman Melissa Schwartz said the interior is conducting a more comprehensive emissions review than any previous administration. They are also appealing a court order that forced them to appeal.

Eric Milito, president of the National Oceanic Industries Association, said he was not sure using the new approach would have changed the government’s conclusions, because oil drilling in other parts of the world is less efficient and import withdrawals increase carbon costs.

The constant use of the old analysis pisses off drilling opponents who say Biden is not living up to his climate pledges.

“We are talking about moving away from the fossil fuel economy and they are selling a giant carbon bomb for rent,” said Attorney Drew Caputo of Earthjustice, which has filed a pending federal lawsuit against the sale in the Gulf.

Some Democrats also objected to the sale. House Natural Resources Committee Chairman Raul Grijalva of Arizona said Biden “needs to do a better job” after promising leadership on climate issues while continuing a fossil fuel program with a long history of mismanagement.

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The Gulf of Mexico accounts for about 15% of all US crude production and 5% of natural gas.

Industry analysts expected increased selling interest on Wednesday since oil prices rose sharply over the past year. It’s also an opportunity for companies to secure drilling rights before the administration or Congress can increase drilling fees and royalty rates, said analyst Justin Rustant of industrial consultancy Wood Mackenzie.

“Different companies have different approaches and different strategies,” Rustant said. “Some might think this could be a year of great achievement.”

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Brown reported from Billings, Montana.

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