US Interior Department finalizes five-year plan to hold three offshore oil, gas auctions

US Interior Secretary Deb Haaland has signed off on the Interior Department's plan to conduct the fewest oil and gas lease sales in history, with just three auctions in the Gulf of Mexico planned over the next five years, the department said Dec. 15.

Despite heavy pushback from the oil and gas industry, the final 2024-2029 National Outer Continental Shelf Oil and Gas Leasing Program maintains a Sept. 29 proposal that called for a total of three auctions to be held in 2025, 2027 and 2029, all for acres in the Gulf of Mexico. No auctions are contemplated off the coast of Alaska.

The new five-year offshore leasing program stands in stark contrast to the Trump administration's 2018 proposal to hold 47 sales across all US coastal areas.

The Inflation Reduction Act requires Interior to offer at least 60 million acres in offshore oil and gas lease sales a year prior to issuing any offshore wind leases. The Biden administration has touted its efforts to align the program with the goal of net-zero emissions by 2050.

"These three lease sales are the minimum number that will enable [Interior's] offshore wind energy program to continue issuing leases in a way that will ensure continued progress towards the administration's goal of 30 GW of offshore wind by 2030," the department said in a press release.

Because it generally takes anywhere from three to 15-plus years to see production from a new lease, analysts at S&P Global Commodity Insights are not expecting any immediate impact to US oil production from the reduced leasing program. However, medium- to long-term impacts are more likely, particularly if fewer lease sales and more restrictions on operations prompt producers to forego the Gulf of Mexico for other opportunities either onshore US or abroad.

Alternatives

Haaland signed the record of decision and approval of the new program Dec. 14.

That record of decision includes a memo from Bureau of Ocean Energy Management Director Elizabeth Klein laying out the four options the agency considered in its final programmatic environmental impact statement.

Those options included no new lease sales; sales in Alaska's Chukchi Sea, Beaufort Sea and Cook Inlet as well as three Gulf of Mexico planning areas; the aforementioned sales plus additional auctions in the Mid-Atlantic, South Atlantic and Southern California planning areas; and sales in 25 of the 26 Outer Continental Shelf planning areas.

In the memo, Klein said BOEM identified the no-sales option as the "environmentally preferable alternative" but determined that such a move would "not best meet national energy needs."

Having settled on holding three sales in the Gulf of Mexico, those auctions will be subject to mitigation measures "to reduce impacts on topographic features and pinnacle trends," including lease stipulations to avoid "sensitive bottom habitats" and protect sensitive seafloor features, according to the memo. Additional mitigation measures to avoid or minimize environmental harm will be developed and individually applied to the specific circumstances of each lease sale.

The record of decision noted that, under the final program, Haaland "retains discretion ... to determine whether, when, and under what terms a lease sale should be held and the precise acreage to be offered."

BOEM is set to hold a Gulf of Mexico auction, referred to as Lease Sale 261, on Dec. 20. It is the last of three offshore oil and gas lease sales mandated by the IRA and will now be the last opportunity for oil and gas producers to scoop up new acreage in federal waters until 2025.