Sen. Joe Manchin (D-WV) criticized the Biden administration for turning down a recommendation for an offshore oil and gas lease sale that Interior Department staff concluded would improve energy security.
Manchin was responding to a memo from the department’s Bureau of Ocean Energy Management showing the agency explored charging a lower royalty for offshore oil and gas leases in Alaska’s Cook Inlet in order to lure more bidders but declined to due to climate change concerns.
“I am appalled by its contents, which make crystal clear that this administration is literally putting their radical climate agenda ahead of the needs of the people of Alaska and the United States,” Manchin said in a statement Friday.
Manchin’s statement is the latest of several instances in recent days of him splitting with his party on legislation and criticizing Democrats and the Biden administration.
The Senate Energy and Natural Resources chairman has also grown increasingly frustrated with the administration’s implementation of the Inflation Reduction Act, the Democratic healthcare and green energy spending deal Manchin crafted with Majority Leader Chuck Schumer (D-NY).
Manchin was the central player responsible for securing the resurrection of the Cook Inlet sale, known as Lease Sale 258, via the spending deal after the lease sale was canceled, using leverage to facilitate more oil and gas leasing alongside the law’s spending for renewable and other green energy technologies.
The department carried out the Cook Inlet lease sale in December.
Manchin has praised the advancement of new lease sales since the law was passed, expressing that they vindicated his deal with Schumer and will increase supplies of domestically produced energy.
The BOEM memo, which was published accidentally last year before being withdrawn and obtained by the Washington Examiner, shows the department considered an alternative sale option in Cook Inlet with a lower royalty rate that would have made it more viable for development and improved U.S. energy security.
The department instead published a final sale notice with a higher rate of 18 3/4%, however, and the lease sale yielded a bid for just one block totaling $63,983 out of the nearly 200 blocks offered.
“A lower royalty of 16 2/3 would also be expected to incentivize additional blocks receiving bids, increase bonus bids, and increase the chances of a discovery being developed,” the memo said. “If a Cook Inlet prospect would be developed, there would be additional government revenues and greater energy security for the State of Alaska, especially if development of natural gas resources in the Cook Inlet ameliorated the long-term supply challenges facing the Anchorage area.
“Nevertheless, because of the serious challenges facing the Nation from climate change and the impact of GHGs from fossil fuels, BOEM is not recommending this option since it would not include an appropriate surcharge to account for those impacts,” the memo said.
The Inflation Reduction Act also brought back two other previously canceled oil and gas lease sales, both of which cover acreage in the Gulf of Mexico.
The Interior Department canceled all three lease sales in May 2022. Cook Inlet was canceled due to lack of industry interest, the department said.
The Inflation Reduction Act also enabled Interior and BOEM to charge higher royalties on leased acreage, something the Biden administration and liberal Democrats pushed for as a way to return a higher share of earnings to taxpayers.
President Joe Biden sought to restrict new oil and gas leasing and imposed a pause on all new leasing during his first week in office, but his administration has since leased new acreage due to the IRA’s leasing provisions, as well as court decisions that blocked his leasing pause.
Reporting from The Washington Examiner.
