Yesterday, Thursday, May 25 (2023), the first tenders for the sale of oil and gas exploration concessions in America were held, after delays of nearly 11 months, generating nearly $80 million for federal coffers.
It is the second auction of its kind to be held in New Mexico – the second largest oil-producing state in the country – since President Joe Biden took office in 2021.
The tenders include offering more than 10,000 acres (40.5 square kilometers) in New Mexico and Kansas, according to a report published by Reuters and seen by the specialized energy platform.
The US Land Management Office revealed that about 8,569 acres were sold for a total of $78.8 million.
This represents a reversal on the part of the climate advocate Biden, who decided immediately after taking power to suspend the granting of new concessions for oil and gas exploration in the lands and waters of the federal government.
Auction details
The largest bidders were Promontory Exploration and Devon Energy, who both secured leases in New Mexico.
While all but one of the leases sold in Kansas went to Morphin Drilling, the remaining lease was acquired by Red Oak Energy.
Compared to previous bids, the offered areas are “modest”, and included 19 plots on an area of 3 thousand and 300 acres in a part of the Permian Basin in the state of New Mexico in the southwest of the country.
It also included 26 plots in Cheyenne, Kansas, in the American Midwest, on an area of 6,800 acres.
According to one of the sales documents issued by the US Office of Land Management, the potential of the offered areas in Kansas is estimated at 1.53 million barrels of oil and 16.66 thousand cubic feet of gas.
In New Mexico, one acre is expected to produce 3.2 million barrels of oil and 18.61 million cubic feet of gas.
Crude oil production in New Mexico has increased by more than 20 times compared to Kansas over the past year (2022), according to the US Energy Information Administration.
Inflation Reduction Act
The Ministry of Interior had tried to continue suspending the granting of rights to lease oil and gas sites until a study of the environmental and climatic effects.
However, the inflation reduction law passed last year (2022) stipulates that bids be issued for oil and gas exploration in America if the same concessions are granted for renewable energy projects.
The conditions for selling concessions will reflect the new requirements of the law to reduce inflation, including raising the license fee to 16.67%, compared to 12.5% previously.
In doing so, auctions start at $10 an acre, compared to just $2 before the law was passed.
Several environmental groups have protested, seeking to overturn the sale of the concessions, and have said that the Biden administration has failed to analyze efforts to mitigate the greenhouse gas emissions from developing the areas.
The graphic below – prepared by the specialist energy platform – includes the most prominent features of the Biden plan to achieve the energy transition and combat climate change:
Biden is between two brats
The United States seeks to achieve the goal of carbon neutrality by 2050, and therefore enacted the Biden-led Inflation Act, which provides unprecedented support for renewable energy projects, as well as energy transition plans and emissions reductions.
On the other hand, critics of Biden believe that this trend may threaten to reduce US energy exports to Europe during the current year (2023), as the continent seeks to find alternatives to Moscow’s supplies, which were halted due to the invasion of Ukraine.
The Biden administration sees fossil fuel sources as a “villain” character, due to the oil and gas industry’s role in “moving” prices up and reaping the gains behind those flames, according to an article by Dan Eberhart, CEO of Canary Oilfield Services, published by Forbes magazine. (Forbes).
Despite the recent rise in energy prices, Biden continues to implement his policies restricting investments in the oil and gas exploration sector in America, and developing production supplies, by blocking federal land leases, or preventing approvals for the construction of new pipelines to transport crude through pipelines.
Eberhart expected, in his article, that fossil fuel resources, especially oil and gas, would retain their status as a real tool for increasing US energy exports and enhancing domestic energy security.
America’s oil and gas potential
The past year 2022 witnessed record numbers for the oil and gas sector in America, as the country maintained its lead in the list of the 10 most oil-producing countries during the past year 2022, and US oil production reached 17.9 million barrels per day, according to Oil & Gas Journal data.
The increase in US shale oil production over the past 12 years has also propelled America to the position of “the largest oil and gas producer in the world,” says Energy Platform editorial advisor, energy economist Dr. Anas Al-Hajji.
On the gas side, US LNG shipments to Europe increased by 150% in 2022, and were estimated at more than 55 billion cubic meters.
In a related context, Bloomberg New Energy Finance expects that the growth of oil production in the United States will remain calm during the current year (2023), with the total ranging between 12.4 and 12.9 million barrels per day.
According to the report issued in March, oil production in America – in all scenarios – will remain below the record level of 13 million barrels per day, before the Corona epidemic.
Claudio Lopes, an oil analyst at the Corporation, says that there are no current indications that the slowdown in oil production growth in America will end in the near term.
This slowdown is due to 3 main reasons: Low productivity of wells, conservative investment strategy of producers, and high cost of oil field services, according to the report.
related topics..
Also read..
Leave a Reply