Between August 2021 and February 2022, President Biden’s Bureau of Land Management’s approval of drilling permits was low, averaging about 200 per month. After Russia invaded Ukraine, however, the approvals picked up with 473 approved in March and 357 approved in April. Those approvals were still much less than the 600+ approved in April and May 2021. And, there is still a large number of pending permits: over 4,400. Biden’s call on U.S. oil and gas producers to drill more — and his ban on Russian oil imports — focused attention on the administration’s handling of the federal oil program, which constitutes 22 percent of the national supply. It appears Biden directed Interior Secretary Haaland to pick up the pace of permitting to mollify the political pressure rising along with pump prices.
Receiving a permit to drill is a necessary step for oil and gas companies to undertake once they have purchased a lease. However, the determination to drill depends on many factors including finances, local regulations, the availability of materials such as steel, and worker availability. Workforce availability and supply chain issues are currently obstacles to oil field development, as they are in many other industries. Also, given that the Biden administration has said repeatedly that its policy is to end drilling on federal lands, the oil and gas industry is “skeptical” regarding the true nature of the approvals and whether further investment is in their economic interest. This is particularly true since the Biden administration has increased royalty rates from 12.5 percent to 18.75 percent and cut about 80 percent of the acreage proposed by industry during environmental reviews ahead of proposed onshore lease auctions.
Status of Onshore Lease Sales
The Biden administration has yet to hold a single onshore lease sale. In April 2022, the Department of the Interior announced it would proceed with six oil and gas lease sales as part of a reformed federal leasing program that reduced land available by 80 percent and increased royalty rates for drillers. The lease sales were being held because of a June 2021 federal court ruling blocking Biden’s attempted “pause” on all new leasing, where the judge indicated that Congress had ordered the lease sales and Biden was violating the law.
The Biden administration was supposed to hold its first onshore oil and gas lease sales in Wyoming and several other states in June. It has postponed some of those sales, in fact, more than once. The date for three lease sales slated for New Mexico, Colorado and Wyoming is now supposed to take place at the end of June, a year after the Court order them to be held. The Bureau of Land Management (BLM) originally scheduled the New Mexico and Colorado sales for June 16 and the Wyoming sale for the week after. According to BLM, “The date for this sale has shifted slightly to complete the analyses required under the National Environmental Policy Act and allow time for protest resolution.” In addition, earlier this month, a separate oil and gas lease sale in Nevada scheduled for June 14 was delayed two weeks. Two other lease sales set for June 28 in Utah and Montana have so far not been pushed back.
Since taking office, Biden has canceled the Keystone XL pipeline, rolled back drilling in Alaska’s Arctic National Wildlife Refuge, canceled drilling in the Naval Petroleum Reserve—Alaska and pushed for green energy subsidies, while increasing fees on the oil and gas industry. His “pause” on leasing on federal lands was overturned by a federal judge, but as yet no onshore lease sales have been held in 18 months of the Biden administration. With one week remaining in June, squeezing in six oil and gas lease sales may be a difficult task, or maybe there will be further delays based on protests from environmentalists that have already delayed several lease sales. Delays and uncertainty about political risk are known to drive investment capital away from projects. Between the Administration’s mixed messages and their friends in the Green Movement’s repeated litigation, businesses are less likely to invest in federal land production of the oil and gas the Biden Administration argues it wishes to increase.