Almost immediately after taking office in 2021, President Biden imposed a moratorium on federal oil and gas lease sales. Thirteen states in total, including Louisiana, Texas and all but one state along the Gulf Coast, filed suit. The suits claim substantial loss of revenues for local government funding, loss of jobs for those states’ workers, and Louisiana specifically cited the loss of funds to preserve and restore their coastline. The U.S. District Court for the Western District of Louisiana has now ruled that moratorium violated the law and cannot be imposed. Leads sales as required by the mineral leasing act are to now continue to take place at regular intervals. This is a significant victory for our industry and particularly for our collective interests in the offshore Gulf of Mexico. Interestingly, and perhaps not coincidentally, there is other recent news tied to the resumption of oil and gas leases.  

The Inflation Reduction Act (IRA) that was signed into law on August 16th, includes provisions that will that can greatly benefit the oil and gas industry. In particular, the Department of the Interior cannot offer leases on federal land for wind and solar energy projects without having also offered a certain amount of land for oil and gas leases. For this reason, oil and gas leasing on federal lands could resume independent of the recent above referenced ruling. One thought behind this inclusion is that the Biden moratorium was believed to be unconstitutional and therefore why the oil and gas provision was added as part of the new IRA law.

Whatever the case may be for how the oil and gas leasing provision found its way into the IRA, the good news is that production on federal lands will resume. Ultimately, this is what is most important for long-term prospects of our industry in the United States. This recent ruling, as well as the provision of the IRA, instill confidence in all stakeholders that the US Gulf of Mexico will remain a very active oil and gas producing basin.