Will New Orders Kill Oil and Gas Two Houston Oil Companies Suss-Out Biden’s Pause on Oil and Gas Leasing in the Gulf of Mexico By Virginia Billeaud Anderson
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ollowing a toned-down swearing-in with Gaga and J-Lo, President Biden began to sign executive orders, one of which temporarily suspends oil and gas leasing in the Gulf of Mexico. Biden’s January 27 order directs the Interior Secretary to pause on new oil and natural gas leases on public lands and offshore waters, and review leasing and permitting practices. Where lawful, the Secretary can adjust royalties or take other appropriate action to account for corresponding climate costs. Wondering if Biden’s order sucker punches Houston oil companies leasing in the Gulf, I peeked at two of them. Onshore federal leases, Keystone, and mega-majors like Chevron are beyond this article’s scope, its focus is Houston independents operating in the Gulf. In November 2020, the Bureau of Ocean Energy Management (BOEM)
Talos Energy’s GOM Mississippi Canyon Operations. Talos Website Image by David Duncan
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conducted a sale of Gulf of Mexico federal offshore oil and gas leases in New Orleans. Lease Sale 256 generated over $120 million in high bids, spread over 93 tracts that covered 517,733 acres. It was the 131st GOM sale to be held since the government began offshore leasing in 1954. W&T Offshore, a Houston-based independent that has been exploring and producing oil and natural gas in the GOM since 1983 was among 23 companies with high bids. W&T bid $518,000 for 8,800 acres on two offshore blocks for a five-year lease term and 12.5% royalty. A puny shopping trip, compared to the year before when W&T snatched 83,800 acres in a GOM Lease Sale. That same year the company acquired, not at auction, 119,500 federal Gulf acres and an onshore processing facility. BOEM typically took up to 90 days to accept or reject a high bid, and Biden
signed his order within 90 days of the sale, so it wasn’t a dumb question to ask W&T if Biden’s order waylaid their leases. Al Petrie in Investor Relations replied the Bureau awarded their leases before Biden issued his order, W&T is registered as Lessor. Nothing else, however, is certain. People are calling, Petrie said, but they don’t have answers, and they don’t know if the executive order will delay drilling permits. The company intends to cooperate with the administration, and is encouraged by the fact that the Bureau issued some drilling permits after Biden signed. In October 2020, an analyst asked W&T’s CEO Tracy Krohn if they planned to participate in the November Lease Sale, the implication being a Biden victory could unleash permitting delays and costs uncertainty. Yes, Krohn said, there’s no reason not to. W&T doesn’t
