After Willow, U.S. Needs Consistent Oil and Natural Gas Support from Washington

Mark Green
Posted March 16, 2023

The Biden administration’s Willow decision has many trying to determine the White House’s true heart on oil and natural gas and their future role in America’s energy mix. Check out this sampling of Willow news headlines:

• New York Times: “Big Oil Gets Its Mojo Back”
• Washington Post: “Biden Walks a Cliff Edge on Alaskan Oil”
• Axios Generate: “Big Oil’s Breather”
• RealClear Energy: “Alaska, Oil, and Joe Biden: Do You Believe in Miracles?”

Miracles? Hold the confetti – for now.

Given the administration’s record of actions, inaction and negative messaging on oil and natural gas the past two years, it’s not clear that the Willow approval means the White House is squarely on the right energy policy path.

Exhibit A: Willow came with an administration announcement that it will withdraw nearly 3 million acres in the Arctic Ocean from future oil and natural gas development, and that it intends to limit future leases in more than 13 million acres in the National Petroleum Reserve-Alaska (NPR-A).

There’s also the broader picture, with future federal oil and natural gas leasing – especially offshore – still very much in limbo. More below.

Even so, the go-ahead for Willow is critically important, as Americans recognize that oil and natural gas are our country’s leading fuels today and are projected to lead other energy sources in 2050. They’re reliable, available and affordable for American families, businesses and manufacturers – powering the economy and strengthening America’s energy security in ways no other fuel source can match.

Let’s also note that the Willow decision resulted from perseverance by ConocoPhillips (the company that will develop the tracts in the NPR-A), Native Alaskan communities and organized labor – plus the bipartisan support of state and federal legislators. These all came together in a good way for America’s energy future.

The big question is what the administration does next. More mixed messages or a steady, consistent course that supports American oil and natural gas? Unfortunately, politics is a factor (as the Wall Street Journal editorialized).

The best policy approach would include a well-conceived plan for more robust leasing, permitting reform to allow needed infrastructure projects to go forward, and an ongoing commitment to streamline regulation. Negative messaging from Washington on the oil and natural gas industry, chilling new investment, should end.

Now, about offshore leasing. It’s deeply concerning that the administration has created a lapse in strategic planning and lease sales for the Outer Continental Shelf. Recently, the administration indicated a finalized five-year offshore leasing program will not be completed until December at the earliest – which means the U.S. will have been without a leasing program for more than 500 days (since the last one expired last June 30, 2022).

That’s an unprecedented interruption in offshore leasing, one that could impact America’s energy security. The offshore accounted for nearly 15% of total U.S. oil production in 2022 and about 2% of U.S. natural gas production. At times offshore oil production has represented more than 30% of total U.S. production.

The leasing program is vital for companies to plan for future development. A lease sale cannot be held unless it is included in the five-year program issued by the U.S. Interior Department. Then, the process can take seven to 10 years before actual production starts. Leases must be sold, explored and developed on a continuing basis for steady production.

What we have now is an emerging gap in that lengthy, multi-faceted process. Because energy development occurs over a number of years – contrary to the president’s comments last year, you can’t just turn production on and off – this is a gap that won’t be seen immediately. But as existing wells naturally decline and energy demand continues to grow, failing to begin developing new leases, starting with a lease sale, eventually will impact production.

Think of an NFL team that doesn’t participate in the annual college draft for a couple of years, and as a result doesn’t have young, developed players to put in the lineup when the current starters decline in performance or retire. Or, similarly, if a corporation doesn’t recruit new talent, it will eventually see a gap in capable workers to replace retiring employees or others who leave the company.

Without a robust leasing program, the U.S. could face a production gap down the road that is dangerous to American security. Holly Hopkins, API vice president for Upstream Policy:

“Delay and uncertainty over the next offshore oil and natural gas leasing program has put the United States in the risky and unprecedented position of having a substantial gap between leasing programs for the first time since the process started in the early 1980s. Because a finalized leasing program is not yet in place, American producers are at a significant disadvantage on the global stage, which could threaten our country’s economic and national security.”

U.S. Sen. Joe Manchin, chairman of the Senate’s Energy and Natural Resources Committee, called the leasing program delay “disturbing” and noted that a leasing program is required by federal law:

“Let me be clear – this is not optional. The Outer Continental Shelf Lands Act mandates that the Secretary of the Interior ‘shall prepare’ this program to ‘best meet national energy needs.’”

Unfortunately, this has not happened in a timely way.

Ultimately, actions speak louder than words. The administration has done the right thing in approving the Willow project. We applaud the decision. But if the White Houses is serious about doing what’s best to meet America’s energy needs, it will follow up with consistent actions that demonstrate support for safe and responsible oil and natural gas development.