A trade organization representing U.S. oil and gas companies is pressuring the Biden administration to ratchet up lease sales on federal lands and waters, including the Gulf of Mexico, the group’s leader said Wednesday.
Mike Sommers, president and CEO of the American Petroleum Institute, said he is hopeful for at least one sale in 2022 but that API is negotiating with the White House and the Department of the Interior to hold more. Sommers pointed out that federal law requires four sales each year if land is available.
“We are working closely with the administration to get production and particularly the lease sales going as soon as possible,” Sommers said during a conference call following his group’s 2022 State of American Energy event.
Shortly after taking office in January 2021, President Joe Biden issued an executive order that halted oil and gas leases on public lands and offshore waters, pending a review of federal permitting and leasing practices. Louisiana, led by Attorney General Jeff Landry, joined 12 other states in filing a lawsuit in March to stop Biden’s plans.
In June, U.S. District Judge Terry Doughty of Lafayette, granted the 13-state coalition a preliminary injunction, paving the way for a lease sale in November that generated more than $191 million in bids for 1.7 million acres in the Gulf of Mexico. The sales, which are essentially federally sanctioned auctions, allow companies to compete for leases on federal lands or spaces in offshore waters for oil and gas extraction.
API, which represents roughly 600 companies, and 11 other energy groups filed their own lawsuit in August against the Department of the Interior’s leasing policies. That lawsuit is still ongoing.
In discussing the state of the nation’s energy sector Wednesday, Sommers took aim at other domestic policies that he said hamper oil and gas production. Those policies include Biden’s decision to cancel the Keystone XL pipeline between the United States and Canada and a potential tax increase on natural gas exports amid soaring inflation.
“As a country, do we really want to stay on the path of restricting production, denying permits, closing off access and returning to the days of dependence on foreign sources?” Sommers said in prepared remarks for the event. “This is short-sighted energy policy, and we must consider those it’s impacting.”
Sommers offered a rosy outlook on the nation’s energy industry for 2022 following a crash in oil and gas demand during the initial onslaught of the COVID-19 pandemic. API officials estimated that national demand plummeted from 100 million barrels a day to 80 million barrels at the height of the pandemic, though they said demand is now approaching pre-pandemic levels.
Amid API’s tussle with the federal government, Sommers repeatedly touted efforts by oil and gas leaders to address climate change, including his organization’s Climate Action Framework, which outlines its suggestions for reducing emissions, particularly methane, and developing cleaner fuels. He even praised the investments in carbon capture technology outlined in Biden’s $1 trillion infrastructure bill, signed in November.
Despite the global transition to renewable energy, Sommers said oil and natural gas will still be critical as greener sources like wind and solar continue to mature in their ability to provide wide-scale electricity. Sommers pointed to liquefied natural gas, or LNG, as a key driver of the nation’s energy sector.
“Some alternative sources, like solar and wind, are intermittent. They need natural gas as a backup,” he said. “No matter how quickly we incorporate more renewable sources of energy, natural gas will be critical to a reliable energy grid.”