Consistent with the requirements of the US Inflation Reduction Act (IRA) that aims to accelerate the nation’s shift to clean energy and the government’s target of net zero emissions by 2050, the Department of the Interior has unveiled a plan to phase down oil and gas leasing in the Gulf of Mexico.

The proposed final programme stipulates a maximum of three potential oil and gas lease sales – the fewest oil and gas lease sales in history – in the Gulf of Mexico, scheduled in 2025, 2027 and 2029.

It also proposes zero oil and gas lease sales in US Atlantic, Pacific and Alaskan waters.

The areas considered for leasing and number of potential lease sales have been significantly narrowed from the previous Administration’s proposal of 47 lease sales off all coastal areas in the US over a five-year period. ‘The previous proposal presented risks to local coastal economies – particularly for communities along the east and west coast where offshore oil and gas development has not been authorised in decades, if ever,’ said the Department of the Interior.

The IRA does not allow the Interior Department’s Bureau of Ocean Energy Management (BOEM) to issue a lease for offshore wind development unless the Agency has offered at least 60mn acres for oil and gas leasing on the US offshore continental shelf in the previous year. The three potential sales proposed are the minimum number that will enable this to happen, ensuring continued progress towards the Biden-Harris Administration’s goal of 30 GW of offshore wind by 2030.

Reacting to the proposal, Mike Sommers, President and CEO of the American Petroleum Institute (API), says: ‘At a time when inflation runs rampant across the country, the Biden Administration is choosing failed energy policies that are adding to the pain Americans are feeling at the pump. This restrictive offshore leasing programme is the latest tactic in a coordinated strategy to reduce energy production, ultimately weakening America’s energy dominance, limiting consumers access to affordable reliable energy and compromising our ability to lead on the global stage. For decades, we’ve strived for energy security and this Administration keeps trying to give it away.’

Meanwhile, the Independent Petroleum Association of America (IPAA) said it was ‘disappointed’ by the content of the offshore five-year leasing programme. Jeff Eshelman, President and CEO, says: ‘It’s clear that the Biden Administration has chosen to align its policy decisions with environmental activists rather than put the best interest of American consumers first. A plan with only three leases in five years will not only hamper American production but jeopardises our energy security and will result in hundreds of millions of dollars of lost revenue to coastal states and the federal treasury. The sad truth is that this plan will force the US to get oil from other nations rather than develop American resources by American companies.’

US construction costs fall for renewable and gas-fired electricity generation 
In other US news, according to recently released data from the US Energy Information Agency (EIA), the average construction costs for solar photovoltaic (PV) systems, wind turbines and natural gas-fired electricity generators all decreased in the US in 2021 compared with 2020. Average construction costs fell by 18% from 2020 for natural gas-fired generators, by 5% for wind turbines, and by 6% for solar PV systems.

These three technologies – solar, wind and natural gas – made up more than 91% of the capacity added to the US electric grid in 2021. Investment in new electric-generating capacity in 2021 increased by 10% from 2020 to $50.8bn, says the EIA.