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BOEM Resumes OCS Lease Sales 258 and 259

In Executive Order 14008 President Biden paused oil and gas lease sales on public lands and offshore waters. Thereafter, the Bureau of Ocean Energy Management (BOEM) canceled Lease Sales 258 (in Alaska’s Cook Inlet) and 259 (in the Gulf of Mexico). Congress, however, required BOEM to hold both lease sales in the Inflation Reduction Act (IRA).

Below, we briefly summarize recent developments for each lease sale and subsequent opportunities available to upstream oil and gas companies.

Lease Sale 258, Alaska’s Cook Inlet

Lease Sale 258 includes the Outer Continental Shelf (OCS) that surrounds Alaska’s Cook Inlet. As stated in the IRA, this lease sale must take place before December 31, 2022.

That said, on October 20, 2022, BOEM released its Final Environmental Impact Statement (FEIS) for Lease Sale 258. The 428-page FEIS analyzes the environmental resources in and around Cook Inlet (i.e., beluga whale populations and commercial fishing of Pacific salmon), as well as environmental mitigation techniques. The FEIS could be a target in any potential future litigation.

At bottom, Lease Sale 258 offers 958,202 acres of land in 193 unleased OCS blocks. BOEM estimates that this lease sale could result in the discovery and development of approximately 192.3 million barrels of oil and 301.9 billion cubic feet of natural gas. This is a substantial sum and almost certainly would not have been offered by the end of this year absent Congressional intervention.

Lease Sale 259, Gulf of Mexico

Thousands of miles away from Cook Inlet, Lease Sale 259 auctions oil and gas drilling rights in the Gulf of Mexico (GOM) OCS. This lease sale is currently scheduled for March 29, 2023. As stated in the IRA, however, Lease Sale 259 must be held by March 31, 2023.

Lease Sale 259 offers all of the available unleased acreage in the GOM’s OCS except those areas specifically enumerated in BOEM’s Proposed Notice of Sale. Comments may be submitted on regulations.gov before November 21, 2022, regarding Lease Sale 259’s Draft Supplemental Environmental Impact Statement. This provides the regulated community with an opportunity to register their agreement with, or opposition to, Lease Sale 259’s size, timing, and location.

BOEM will likely receive significant engagement from environmental groups during the notice and comment period. However, as previously stated, BOEM lacks discretion over holding this lease sale and must conduct Lease Sale 259 no later than March 31, 2023. BOEM is expected to provide additional information regarding Lease Sale 259 in the near future.

Opportunities for Offshore Energy Development

In sum, BOEM recently has provided several new development opportunities for conventional and renewable energy companies. In Lease Sales 258 and 259 alone, there are opportunities for the discovery and development of several hundred million barrels of oil and cubic feet of natural gas.

Additional opportunities include BOEM’s announcement of the first wind energy lease sale in the Pacific on October 18, 2022. We blogged about this development here. Further, we provided analysis to Offshore Magazine on federal leasing strategy and how it is expected to evolve here.

We anticipate continued growth and opportunity for offshore developers as we round out 2022 and head into 2023. For example, yesterday BOEM finalized two new Wind Energy Areas in the GOM.

Garrett Kral also contributed to this article. 

Copyright © 2023, Hunton Andrews Kurth LLP. All Rights Reserved.National Law Review, Volume XII, Number 305
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About this Author

Jason A. Hill Counsel Hunton Andrews Kurth LLP
Counsel

Jason counsels clients through complex natural resource litigation, compliance, and regulatory issues arising under a wide array of federal natural resource and energy statutes and regulations.

With over 20 years of experience in the environmental and natural resources space, Jason provides clients with strategic solutions to business and operational challenges set in motion by intricate natural resource laws. Particularly, those statutes and regulations surrounding federal public lands, extraction of mineral resources, environmental justice,...

202-419-2046
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