The Trump administration is ready for its last oil auctions in several states, as it faces its last chance to establish Trump’s “energy dominance” agenda, before president-elect Joe Biden takes office, who has pledged to ban oil drilling in federal lands.
The U.S. Bureau of Land Management will open oil auctions for 37 parcels; which are equal to 6,851 acres in the states of New Mexico, Texas, Oklahoma and Kansas. Although most of the parcels are located in New Mexico, upon the Permian Basin area, the world’s biggest oilfield.
The sales, set to happen in January 19, 22; February 22 and March 9, will reveal the level of demand, as the industry faces a substantial paradigm shift. Not only due to Biden’s climate change agenda and the ESG approach, but also as the pandemic has brought low prices and a demand crash.
Just recently, as we have reported, the Trump administration conducted an oil lease sale on Alaska’s Arctic National Wildlife Refuge; with very little interest from the industry. According to experts, banks and major oil companies accorded not to bid on the sale, as it was so controversial for its impacts on wildlife and environment.
About a week earlier, major BP ended its 60-year presence in Alaska after selling all of its assets, including upstream and midstream; this was seen as symbolic of the little interest that the area awoke in major oil companies.
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Oil auctions in the face of the upcoming Biden administration
When the sale happened, just the state-owned company participated in the sales and took most of the offers. Overall, the Alaska sale was seen as a failure.
Oil leases on federal lands were a cornerstone for Trump’s attempts to establish a U.S. “energy dominance”, and to maximize domestic production of oil and gas, to the detriment of cleaner alternatives such as renewables.
In contrast, Joe Biden has pledged to ban new drilling and oil auctions on federal lands; still he has not yet announced a plan or a timeline to achieve that. Still, this promise has sparked concerns in the industry; the state of Wyoming published a study that found that, if banned, eight states of the nation would lose $8,1 billion in tax revenue, and $34,1 billion in investment.
About the new oil auctions, experts and environmental groups have criticized this “aggressive time frame”; the fact that they are being conducted at a time of low prices, economic and political crisis.
In this regard, James Jimenez, director of New Mexico’s Voices for Children, said quoted by Reuters: “This lease sale is being conducted under an antiquated system, which prioritizes the bottom line of oil and gas companies instead of New Mexico taxpayers.”