The Biden administration has green-lighted a record low number of new offshore oil wells, a data point that could inflame the already fierce debate over President Joe Biden’s throttling of the aging offshore oil sector in the Gulf of Mexico.
An E&E News analysis of available data since the George W. Bush administration shows a steady decline in permitted offshore wells, reaching the lowest points during Biden’s tenure. The data comes as the president is facing pressure from Republicans about his domestic oil policies given the uncertain trajectory of global prices in the wake of Hamas’ attack on Israel this past weekend.
The price of global benchmark Brent crude jumped 4.2 percent Monday to $88.15 a barrel. It eased slightly early Tuesday, falling 13 cents a barrel.
Permitting has been tight since Biden took office during a period of low oil prices and sluggish drilling due to the Covid-19 pandemic. Even as demand picked up and industry began to revive, the Interior Department during the president’s first two years approved 30 percent fewer oil and gas wells off the nation’s coasts compared with the same period during the Trump administration.
The Bureau of Safety and Environmental Enforcement permitted 105 wells in Biden’s first two years. That’s compared to approving 148 during Trump’s first two years in office and 275 when Barack Obama took office in 2009 and 2010.
Experts say this decline reflects realities at sea as much as shifts in federal oil policy. The data highlight that oil companies are drilling fewer wells in the Gulf of Mexico — where almost all the U.S. offshore drilling occurs — as companies move into deeper waters where drilling is more expensive. They are also responding to tougher regulations and the constant influence of oil prices.
“It really is the economics and the strategy driving these things and not government policy,” said Scott Nance, a Gulf of Mexico research analyst with Wood Mackenzie. “The bigger economic trends are what drives permitting, far more than any one administration.”
But even before the outbreak of war in the Middle East, tension over U.S. oil and gas policies has been high, following the Biden administration’s decision last month to issue the smallest five-year offshore oil plan in history — one of the administration’s boldest moves to potentially curb future development. Under the plan, Interior will hold three lease sales between 2025 and 2029.
Many climate activists weren’t satisfied, slamming the White House for holding any oil sales, while drillers and GOP allies of the industry said so few opportunities to buy new drilling rights will exacerbate existing pressures to reduce activity in the Gulf of Mexico and undermine national production.
Holly Hopkins, vice president of upstream policy for the American Petroleum Institute, said the administration’s actions, from the constrained five-year oil plan to trying to shrink access to offshore waters for endangered species and other reasons, have a combined effect of chilling industry willingness to invest in the United States.
“[Biden’s policies] make it more difficult to substantiate the long-term, capital-intensive investments required for production in the Gulf of Mexico,” she said in an email. “This is a concerning trend for the future of American energy security.”
The White House has been battered by oil and gas debates since Biden took office, fresh off a campaign promise to end federal drilling. Biden’s early policies aimed at curbing the scope of the oil program offshore were reversed by litigation from the oil industry and Republican-led states.
“I wanted to stop all drilling,” Biden said in an August interview on the Weather Channel. “I lost in court. But we’re still pushing. We’re still pushing really, very hard.”
At the same time, Biden and his energy team struck different notes when gasoline prices climbed last year, particularly after Russia’s invasion of Ukraine, with the president urging domestic drillers to ramp up production with existing, but untapped, permits.
While permitting may be down, offshore production in the Gulf of Mexico has, in fact, climbed over Biden’s time in office, reaching 630 million barrels of oil in 2022. While comparatively high, that still ranks behind the most extreme highs of the Trump administration, when more than 690 barrels were produced in 2019.
If production continues its steady rise, the Biden administration could oversee a new peak for the nation’s offshore oil, helping the U.S. maintain its position as the world’s largest producer.
Melissa Schwartz, communications director for the Interior Department, highlighted this fact, rejecting the idea that industry is…
Read More: A coming oil crash? Offshore permits hit 19-year low under Biden.