Interior Department cancels offshore oil and gas leases in Alaska and the Gulf of Mexico

By Ella Nilsen and Maegan Vazquez, CNN

The Biden administration announced Wednesday it would cancel three upcoming offshore oil and gas leases — two in the Gulf of Mexico and one in Alaska — over a lack of interest and delays.

The cancellation of the previously planned Cook Inlet sale in Alaska, as well as the lease sales in the Gulf, ensures that millions of acres of offshore waters will not be developed for oil and gas — a significant victory for climate advocates.

However, Biden officials have also emphasized the need for more domestic oil production to combat high gasoline prices, which have angered the public and inflamed inflation.

The Biden administration’s five-year offshore drilling plan is set to expire next month, and as of yet, the Department of Interior has not indicated when a new one will be released. While recently testifying in front of Congress, Interior Secretary Deb Haaland said the plan still needed “significant” work, and she didn’t give a date for when the department would release it.

In a statement Wednesday, Interior Department spokeswoman Melissa Schwartz cited a lack of industry interest as the reason Interior was abandoning the Cook Inlet sale.

“Due to lack of industry interest in leasing in the area, the Department will not move forward with the proposed Cook Inlet [Outer Continental Shelf] oil and gas lease sale 258,” Schwartz said.

A source familiar with the sale said Interior had received no comments from industry that indicated specific company interest for leasing Cook Inlet waters during the project’s scoping period or during environmental review. The same source noted sales dating back to 2004 in which there has been little to no industry interest in the Cook Inlet region.

As for the two Gulf of Mexico leases, Schwartz said Interior would not move forward “as a result of delays due to factors including conflicting court rulings that impacted work on these proposed lease sales.”

Earlier this year, Interior delayed several leases as a Louisiana judge’s order prevented the entire Biden administration from using a metric that estimates the societal cost of carbon emissions — also known as the social cost of carbon.

While the administration announced it would restart a dramatically smaller area of onshore oil and gas leases in April, the latest cancellations suggest that the future of the federal government’s offshore oil and gas leasing this year is very much in doubt.

The American Petroleum Institute criticized the administration’s latest lease cancellations, a decision that comes as Americans continue to see gas prices averaging at $4.42 a gallon.

“Unfortunately, this is becoming a pattern,” Frank Macchiarola, the institute’s vice president of policy, economics and regulatory affairs, said in a statement. “The administration talks about the need for more supply and acts to restrict it.”

Macchiarola added, “As geopolitical volatility and global energy prices continue to rise, we again urge the administration to end the uncertainty and immediately act on a new five-year program for federal offshore leasing.”

The administration’s decision was also criticized by Democratic Sen. Tim Kaine of Virginia, who argued that the cancellation and the administration’s failure to use the Defense Production Act or other means to compel US energy companies to produce more sends a “mixed message” as the US seeks to assist Europe with eliminating its reliance on Russian energy amid the war in Ukraine.

“I get the reason for the cancellation announced today was concerns about climate. That’s the reason. And we ought to be concerned about climate,” Kaine said at a Senate Foreign Relations Committee hearing Thursday. “But it strikes me if we’re the largest energy producer in the world, and we know that at least transitionally, our European allies need energy from sources other than Russia, that us going to Saudi Arabia and saying, ‘Please, produce more energy,’ when we’re not willing to do it ourselves — I just don’t get it.”

Kaine said it does not appear that the administration has a “coherent strategy” when it comes to trying to supplant Russian energy and questioned whether the decision had been discussed across federal agencies.

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CNN’s Matt Egan and Jennifer Hansler contributed to this report.