As the U.S. Congress nears the Oct. 1 deadline to agree on spending legislation, some oil and natural gas industry representatives fear a federal government shutdown would have serious implications for leasing.
Congress has until midnight on Saturday to approve a package of 12 bills needed to fund the government. Eight Republican lawmakers have repeatedly blocked a procedural vote to advance an appropriations package while calling for individual discussions for each bill. As the deadline to approve funds draws nearer, it appears more likely a shutdown could ensue.
The U.S. Department of Interior’s (DOI) Bureau of Land Management (BLM) would cease all new oil and natural gas lease sales. Applications to drill and rights of way permits would also be put on pause during the government’s closure, according to DOI’s contingency plan.
The Western Energy Alliance (WEA), which represents 200 exploration and production companies across 13 states, urged Congress to avoid a government shutdown, as it “will have negative impacts on American energy production in the short-term, while adding long-term uncertainty inherent in development on federal lands.”
WEA President Kathleen Sgamma called on the Republican holdouts in Congress to make a deal to avoid a shutdown, as the Biden administration “doesn’t need another excuse to further block development on federal lands and waters…”
“They will use the shutdown, however long, as a reason to further delay projects and leasing,” she said.
In a letter to Secretary of Interior Deb Haaland, Petroleum Association of Wyoming President Pete Obermueller requested pending oil and natural gas permits continue to be issued even if the federal government shutters.
“It is critically important to ensure that maximum amounts of domestic crude oil are produced and processed even during political gridlock resulting in a government shutdown,” Obermueller said. “The program more than covers the costs associated with staffing and resources necessary to approve permits.”
He said, “The program can operate self-sufficiently, and did so” during the previous government shutdown, which lasted 35 days in 2019. The former Trump administration’s BLM during the period approved 267 onshore drilling permits and 16 leases applied for by oil and gas companies, according to the federal agency.
“Americans face increasing costs of fuel for transportation, home heating and cooking in response to…U.S. government policies,” Obermueller added. Global supply has also been tightened as Russia and Saudi Arabia, two of the top three oil producing countries, have stripped 1.01 million b/d in production through the end of the year. Brent crude oil prices are trading near $100/bbl.
The fears over federal oil and gas lease sales stalling in the event of a shutdown come as the DOI announced its Proposed Final Program for the 2024-2029 OCS oil and gas leasing program.
Under the proposal, the Bureau of Ocean Energy Management would issue a maximum of three potential offshore oil and gas lease sales in the Gulf of Mexico – one in 2025, 2027 and 2029 – which Haaland said, “represents the smallest number of oil and gas lease sales in history.”
