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US GoM Leases

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US plans to offer all Gulf acreage to drilling, groups push to nullify leases



Lawsuit looks to nullify $550 million worth of offshore leases

Claims Interior overlooked impact of weakening safety rules

All available Gulf acreage to be auctioned on August 21



In two weeks, the Trump administration will again offer all available unleased areas in US Gulf of Mexico waters for sale to oil and natural gas drilling, but environmental groups have launched a court challenge arguing that this and other offshore sales are based on inadequate analyses and should be nullified.


The goal of the court challenge is to cancel the leases awarded in two Gulf sales in 2018, one in March of this year and the one scheduled for August 21, according to Brettny Hardy, a staff attorney with Earthjustice, which filed the complaint on behalf of three other environmental groups. The past three Gulf sales raised nearly $550 million in high bids.

Hardy said Thursday that it was unlikely that the courts would stop the August 21 sale from happening.

On Wednesday, Earthjustice filed a supplemental complaint with the US District Court for the District of Columbia which argued that the Interior Department's Bureau of Ocean Energy Management violated the National Environmental Policy Act in its environmental review for its upcoming lease sale.

Interior "is authorizing additional oil and gas development without a full and accurate analysis of its impacts or reasoned consideration of how to avoid or mitigate those impacts," the complaint states.

Spokeswomen for BOEM and the National Ocean Industries Association declined to comment Thursday.

The sale this month, known as Lease Sale 253, will offer 77.8 million acres of federal waters in the Gulf, including 14,585 blocks located three to 231 miles offshore.

The agency relied on "outdated" regulations in the review of that sale and ignored the impacts of the Trump administration's efforts to revise and weaken offshore safety rules developed during the Obama administration, the complaint alleges.



These rules include a blowout preventer systems and well control rule, which set new drilling margin and monitoring requirement, and a production safety rule, which set new inspection and certification requirements for offshore operations. Both rules were finalized by the Obama administration in 2016 and formally revised by the Trump administration in 2018.

In addition to overlooking the impacts of weakening those rules, the complaint also claims that Interior ignored the impacts of its 2017 change which lowered federal royalty rates on shallow water leases from 18.75% to 12.5% in order to spur new interest in drilling in those waters.

"Increasing the supply of available acreage in each lease sale has the effect of reducing the competition among oil companies for the leases, which consequently drives down bid prices and enables companies to acquire broader swaths of oil and gas leases," the complaint states.

The complaint filed Wednesday follows lawsuits filed in March 2019 and July 2019 challenging the analyses behind the last three Gulf of Mexico sales: Lease Sale 252, which generated $244 million in high bids on 227 tracts, Lease Sale 251, which generated $178 million in high bids on 144 tracts, and Lease Sale 250, which generated nearly $125 million in high bids for 148 tracts.

Crude oil production in US Gulf waters averaged over 1.98 million b/d in April 2019, but fell below 1.42 million in July, due to shut-ins during in response to Hurricane Barry, according to the US Energy Information Administration. EIA forecasts Gulf oil production to climb to 2.18 million b/d by the end of 2020.

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I am curious as to how knowledgable EarthJustice, or their lawyers, are regarding subsea blowout preventer systems or well control.

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