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Slowdown in Leasing Continues to Frustrate Industry

Analysis by Energy Workforce President Tim Tarpley

Energy Workforce President Tim Tarpley

On Monday, UK Prime Minister Rishi Sunak said the expansion of oil and gas drilling in the North Sea would go forward in order to ensure the UK can maintain its own energy security. The planned expansion includes 100 new oil and gas drilling licenses in the North Sea in the third-quarter of this year with potentially hundreds more to follow.

This follows an earlier announcement by UK Energy Minister Grant Shapps that the government intended to extract 100% of the reserves in the North Sea. The North Sea field has been in heavy production since the 1960s, and in 2014 it was estimated that 42 billion barrels of oil had been produced so far in the region with about another 24 billion available. The Minister made it clear that in his opinion not extracting this resource would only make the UK more vulnerable to the weaponization of energy by foreign actors such as Russia.

Prime Minister Sunak said he believed that the UK could make a wise choice to fully develop the North Sea while at the same time working towards its own climate goals. “Even when we’ve reached net zero in 2050, a quarter of our energy needs will come from oil and gas,” he said. “But there are those who would rather that it come from hostile states then from supplies we have here at home.”

Strikingly, at the same time here in the United States we continue to see growing frustration with the years-long slowdowns and slow walking of leasing permits both onshore and offshore by the Biden Administration. Onshore, the Bureau of Land Management (BLM) approved fewer than 2,900 drilling permits last fiscal year, down from more than 4,900 permits in 2021. That was the lowest level since 2017 when oil prices were around $51 a barrel. Likewise, we see a similar scenario offshore. Since 2021, the Bureau of Safety and Environmental Enforcement (BSEE) has issued only 105 new drilling permits, a 30% decline since the last two years of the Trump Administration.

Last week, the House Energy and Mineral Resources Subcommittee of the Natural Resources Committee held a hearing to discuss these slowdowns and how the delays and uncertainty harm investment in the industry and complicate long-term planning. Subcommittee Chairman Pete Stauber (R-MN) released the following statement after the hearing:

“Offshore energy development will play a critical role in returning to America the energy independence we had just three years ago. Unfortunately, the Biden Administration continues to fail us by not putting forward a robust offshore leasing program for oil and gas development. Today, this Administration’s proposed five-year plan is well over a year past due, and now risks the prospect of having any lease sales in 2024. This inaction not only hurts the American consumer and the economy by driving up energy prices, but it also risks our national security and cedes power to foreign adversaries. It’s past time that the Biden Administration does its statutory duty and executes on an offshore leasing program that unleashes the full potential of American energy.”

Similar frustrations were expressed by Energy Workforce along with 17 other energy trade associations in a letter to the Biden Administration urging them to finalize a new National Outer Continental Shelf Oil and Gas Leasing Program. The letter urges the plan (along with the 11 lease sales included in the June 2022 plan), hold required lease sales and begin the process for sales in 2024. Despite bipartisan support for holding these sales and to speed up the permitting process, we still see what appears to be slowdowns and speed bumps put up by the Administration.

Frustration continues to grow, especially considering the potentially increasing conflict in Ukraine and the resulting disruption to the world’s energy markets. Over the weekend Ukraine launched a series of drone attacks on Moscow and Crimea in response to continued Russian escalations and threats. The conflict appears to be far from a quick end any time soon. Given this uncertainty, ensuring that the United States has a robust domestic supply of energy for its own needs as well as to support our friends and allies could never be more critical.

Energy Workforce will continue to advocate for the American people to have full access to the resources of the United States located offshore and onshore as is already required by law.

Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.



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