S&P Global Platts

US Interior secretary gives no details on restart of lease sales despite court order

•    Haaland says federal leasing review ending 'very soon'
•    Platts Analytics expects muted impact on US oil outlook

27 Jul 2021 | 15:10 UTC

Interior Secretary Deb Haaland declined July 27 to commit to restarting oil and gas lease sales on federal lands and waters by the end of September, despite a judge ordering the Biden administration to put at least two previously scheduled sales back on the calendar.

"This matter is in litigation, and I can't necessarily go into any more details about it," Haaland said when pressed by Senator John Barrasso, Republican-Wyoming, about when Interior would resume leasing. He had asked if she could commit to restarting the sales within the third quarter of this year.

The issuing of new leases has been on pause since President Joe Biden ordered a review of the program in January, although permitting activity continues on existing leases.

Haaland said Interior was still working to finish a review of oil, gas and coal leasing on federal lands and offshore waters. She said Interior would release an interim report, not a final one, on its next steps.

"There's a lot of work that goes into moving that forward," she said. "The review is being finalized internally and we hope to get it out very soon."

S&P Global Platts Analytics continued to expect the leasing review to have only muted impact on the US production outlook, with onshore shale output rising to 8.5 million b/d by end-2022, from 7.3 million b/d in July 2021, and overall US production rising to 12.4 million b/d by end-2022, from 10.9 million b/d this month.
No new timeline

Two lawsuits brought by 14 states with fossil fuel production have challenged Interior's leasing review, with one of the suits getting a US district court judge in Louisiana in June to order an end to the moratorium.

The judge granted a preliminary injunction in the case and ordered Interior to put back on the calendar Lease Sale 257 in western and central Gulf of Mexico and Lease Sale 258 in Alaska's Cook Inlet. The case's next status conference is set for Aug. 17.

Other senators from producer states also pressed Haaland to shed light on the leasing review and timing of future sales.

"This committee needs answers today and it certainly deserves transparency," said Senator Cindy Hyde-Smith, Republican-Mississippi.

Senator Lisa Murkowski, Republican-Alaska, sounded exasperated by Haaland's lack of a fresh timeline, after previously promising a report by early summer and "very, very soon."

"I hope you can sense the frustration that so many of us have in anticipating this and wondering when we will be able to expect that you'll be in compliance with the judge's order," Murkowski said.

Methane limits

Chairman Joe Manchin, Democrat-West Virginia, said future production on federal lands would also hinge on whether the Biden administration adopts tougher limits on flaring and venting and yet does not allow producers to build pipelines to take methane away from wells.

"We're going to have to either adopt a policy that we can get that product to market, or you'll never do any more leasing if flaring is going to be the criteria," Manchin said.

Haaland said reducing venting and flaring on federal lands is a Biden administration priority but that it must wait on a court fight over Obama-era rules.

Platts Analytics said permitting on federal lands has continued at a rapid pace during the leasing review, with more than 2,100 permits approved since Biden took office. The number of approved-but-undrilled permits has increased to over 9,000, or the equivalent of four years of inventory based on current drilling activity of about 85 rigs on onshore federal lands.

"Permitting is likely to continue at a strong pace due to backlog of 4,700 wells still pending approval," said Parker Fawcett, North American supply analyst for Platts Analytics. "With the significant number of stockpiled permits to drill on federal lands, operators have mitigated most near-term risk from potential changes to the permitting program."