Why Repsol’s carbon disposal bids should be rejected (as Exxon’s Sale 257 and 259 bids should have been):
- Sale 261 was an oil and gas lease sale. The Notice of Sale said nothing about carbon sequestration and did not offer the opportunity to acquire leases for that purpose. Therefore, the public notice requirements in 30 CFR § 556.308 were not fulfilled.
- Because there was no draft or final Notice of Sale for sequestration (carbon disposal) leasing, interested parties did not have the opportunity to comment on tract exclusions, stipulations, bidding parameters, rental fees, royalties, and other factors pertinent to any OCS lease sale.
- 30 CFR § 556.308 requires publication of a lease form. No carbon sequestration lease form has been posted or published for comment.
- Carbon sequestration operations were not considered in the environmental assessments conducted prior to this or any other OCS lease sale.
- No evaluation criteria for carbon sequestration bids have been published.
Hopefully, the carbon sequestration regulations that are under development will preclude conversion of leases acquired at Sales 257, 259, and 261. At a minimum, these regulations should require a competitive process for converting any oil and gas leases.
The difference between the conversion of the Exxon and Repsol leases and the conversion of other existing oil and gas leases is that the Exxon and Repsol leases were acquired solely for the purpose of carbon disposal with no intention of oil and gas exploration and production. Also, they can conduct geophysical surveys on their extensive (arguably monopolistic) nearshore Texas lease holdings, which gives them an unfair competitive advantage should a carbon sequestration lease sale be held.
To their credit, Repsol bid legitimately on 9 oil and gas leases at Sale 261. Exxon did not participate in Sale 261, and their only participation in Sales 257 and 259 was for carbon disposal purposes. Prior to Sale 257, the company had not acquired an OCS lease since 2008.
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