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Posts Tagged ‘leasing policy’

Sec. 12(a) of the Outer Continental Shelf Lands Act (OCSLA, 43 U.S. Code § 1341(a)): “The President of the United States may, from time to time, withdraw from disposition any of the unleased lands of the outer Continental Shelf.”

As previously posted, the Sec. 12(a) authority has been cynically exercised by Presidents from both parties and should be repealed or revised.

Unsurprisingly, there are now reports that President Biden intends to permanently withdraw large areas of the OCS from leasing consideration before he leaves office in 2 weeks. Apparently, the leasing ban will include large segments of the Atlantic, Pacific, and the eastern Gulf of Mexico.

Sec. 12(a) facilitates (encourages?) rash, politically motivated decisions that could have major long-term implications for energy security and the economy, and allows Presidents to ignore the deliberate, multi-phase review and comment process that has been established for making leasing decisions.

Note that Presidents have exercised this authority seven times. In every case, the action was taken just prior to the end of the President’s term in office.

Questions:

  • Can a President reverse a Sec. 12(a) decision made by a predecessor? That is a massive legal question that has yet to be fully considered by the legal system.
  • Could legislative action reverse a Sec. 12(a) decision? Yes, but such legislative action would be difficult to enact (just as it would have been difficult for any of the Sec. 12(a) withdrawals to have been enacted legislatively).
  • Is a revision to Sec. 12(a) being considered? Not that I am aware of. Given that the authority has been exercised by both parties and that strong opposition is likely, a revision would be challenging.

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EIA has posted the June 2024 US production data. Gulf of Mexico production was remarkably flat from February through June, with a maximum deviation of only 2.0% (FEB vs. APR) and a deviation of only 0.5% from the beginning of this 5 month period to the end. Looking at the historical EIA data, this is about as stable of a 5 month period as I could find. Presumably, production from the new deepwater facilities is offsetting declines elsewhere as anticipated.

Unfortunately, the production growth forecasted by BOEM is not being realized. BOEM’s 2024 production forecast of 2.013 million bopd will likely be more than 200,000 bopd too high. Their forecast of >2 million bopd through 2027 is increasingly doubtful.  These production forecasts contributed to (or were an excuse for) unprecedented leasing policies intended to prevent production from rising too high for too long.

Per ONRR data, the Gulf of Mexico continued to be the top oil producer for Federal lands in 2023. An additional 72.7 million bbls were produced on Native American lands. New Mexico, which has experienced significant Permian basin production growth, ranked second. The Texas Permian was the dominant US oil producer, but that production is almost exclusively on private lands (a big factor in the Permian success story).

Location (Federal lands)2023 production (bbls)
Gulf of Mexico680,548,975
New Mexico409,987,014
Wyoming47,232,043
North Dakota43,225,104
Other33,635,796

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