US President, Joe Biden has signed an executive order that directs the Department of Interior (DOI) to pause new oil and natural gas leasing on federal public lands and offshore waters, concurrent with a review of the federal oil and gas program.
The targeted pause does not impact existing operations or permits for valid, existing leases, which are continuing to be reviewed and approved, according to the DOI.
Industry associations were quick to respond and warn that the moratorium on oil and gas leasing would undermine environmental progress, cost American jobs, and shift the US to greater reliance on foreign energy, among other things.
National Ocean Industries Association President, Erik Milito, said in a statement that the decision is contrary to law and puts America on a path toward increased imports from foreign nations that have been characterized as pollution havens.
“Any pause of American energy opportunities will do untold harm towards American economic, energy, and environmental progress. Reducing American offshore oil and gas development means lost jobs, increased greenhouse gas emissions, and less funding for outdoor parks and recreation activities for urban, underprivileged communities. There is no shortage of negative consequences from this leasing pause,” Milito said, adding “While the executive order is framed as a step towards a climate solution, it pauses energy opportunities in a region that is already addressing climate and emissions goals. The innovators that define America’s offshore energy industry are already contributing to the continued advancement of climate change solutions.”
American Petroleum Institute President and CEO Mike Sommers said: “We share President Biden’s goal for addressing climate change, marked by US innovation and powered by American energy and skilled union workers. Unfortunately, today’s executive action to halt leasing is a step backwards both for our nation’s economic recovery and environmental progress, threatening to cost thousands of jobs and much-needed revenue while increasing emissions by slowing the transition to cleaner fuels.
“With a stroke of a pen, the administration is shifting America’s bright energy future into reverse and setting us on a path toward greater reliance on foreign energy produced with lower environmental standards. Limiting domestic energy production is nothing more than an ‘import more oil’ policy that runs counter to our shared goal of emissions reductions and will make it harder for local communities to recover from the pandemic.”
Jarand Rystad, CEO at Rystad Energy, said the ban will not influence short-term oil prices or even economics of oil E&Ps in the US, but it will be very dramatic for suppliers such as seismic companies, rigs and other exploration-driven oil service segments.
“The exploration departments within oil companies exposed to the GoM, like Equinor, may have to re-evaluate strategies and we could see exploration focus shifting to other ‘friendlier’ regions that are upcoming. Nations rich in fossil fuel resources that were competing with the US to attract investments may benefit.”
“Last but not least, such a groundbreaking policy change by the US, a world leader country, could have a ‘contamination’ effect to other countries’ exploration agenda. It remains to be seen if there will be chain-reaction policy changes elsewhere in the world,” Rystad added.