President Joe Biden won’t have a second term, but his approach to oil policy could echo for years.
Biden’s 2020 campaign promise to rein in drilling was replaced during his presidency by an uneasy embrace of the nation’s oil program.
The White House issued rules that make it more expensive to drill on federal lands. And Biden reduced leasing on those lands — the selling of new drilling rights — by as much as 95 percent, to shrink future development. He also banned new oil speculation across millions of acres of public lands and waters.
Biden came into office promising the greenest agenda in U.S. history, only to retreat to “fossil fuel pragmatism” following high pump prices of 2021 caused in part by Russia’s war in Ukraine, ClearView Energy Partners said in a client note this month.
The firm said Biden’s Democratic successor in the race — likely Vice President Kamala Harris after Biden announced July 21 that he would no longer seek reelection — could display a similar approach if elected despite her more progressive political history.
“We would suggest that reelection pressures could potentially constrain the green ambitions of Harris’ first term,” ClearView analysts wrote last week. “A second-term Biden might have been more willing to pinch the oil patch in pursuit of an environmental legacy.”
Harris recently said she would not attempt to ban hydraulic fracturing if elected, a flip from her anti-fracking position in 2019 during her unsuccessful presidential primary campaign.
Observers say the effects remain to be seen from Biden’s oil record, which includes both austere measures to reshape the oil program and concessions that ensure drilling will continue for years on federal land.
“I think the biggest effect is out years,” said Kathleen Sgamma, president of the Western Energy Alliance in Denver, an industry group that’s sued over the Biden administration’s onshore oil rules.
Biden policies such as holding smaller, less frequent oil sales, will take time to affect production, while his signature oil regulations could be overturned by the court battle, she said.
The White House did not respond to a request for comment.
Many environmental groups have praised Biden for climate actions such as the passage of the 2022 Inflation Reduction Act, which boosted electric vehicles and renewables through tax credits — but they have been more critical of how Biden managed the federal oil program.
Cassidy DiPaola, a spokesperson for Fossil Free Media’s Make Polluters Pay campaign, said the next Democratic nominee needs to address “the unfinished business of truly standing up to fossil fuel interests.”
While Harris might continue Biden’s general approach to oil, former President Donald Trump promised to “drill baby drill” during a campaign speech this month at the Republican National Convention. He’s also promised, if elected this fall, to go after aspects of the Inflation Reduction Act that represent a significant portion of the Biden oil legacy.
As Biden enters his final months as president, here are three ways his administration reshaped drilling on public lands:
Shrinking footprint
One of the most significant changes to the oil program under Biden was a slowdown in oil and gas lease sales, setting up a potentially smaller oil and gas footprint on public lands in coming years.
The Biden administration leased roughly 95 percent fewer acres in fiscal year 2023 than the Trump administration did at a high point in leasing in fiscal year 2019.
The diminished auctions have produced marginal revenues in some cases. A Mississippi auction earlier this year netted just $30.
“The lease sales are anemic,” said Sgamma, president of the Western Energy Alliance in Colorado, of the smaller and more fragmented offerings for new drilling leases in recent years.
Sgamma also pointed to Biden’s efforts to conserve more public land for recreation or wildlife as a strategy to rein in oil and gas.
Biden committed to conserving 30 percent of U.S. lands and waters by 2030, an effort similar to a biodiversity initiative by the European Union to secure untrammeled landscapes for future generations.
Among Biden’s restrictions, BLM has slashed tens of thousands of acres from future drilling in Colorado and proposed to restrict more than 2 million acres from future leasing in southwestern Wyoming. Interior Secretary Deb Haaland banned for 20 years new leasing on lands within 10 miles of the Chaco Culture National Historical Park in New Mexico, as well as any leasing in the Arctic Ocean.
Sgamma said the negative impact on production will show up in a few years — just as current high production on federal lands has thanks to previous administrations’ leases, as well as Biden’s continued approval of oil wells.
“We’re still seeing the effects of the Trump administration’s policies,” she said of today’s high production on federal lands. “If Vice President Harris does win, she’s gonna inherit a lot of bad statistics.”
Mark Squillace, a former Interior Department official under President Bill Clinton, didn’t disagree that Biden’s limits on leasing could shrink the oil footprint on public lands over time.
But Squillace, now a natural resources law professor at the University of Colorado Boulder, said oil development without limitations and planning has historically been a messy way to extract resources. Oil companies can now drill more than 2 miles horizontally from the well head and drill multiple wells from one location. Encouraging that kind of efficiency is a good thing for public lands, Squillace said.
Costlier insurance
The Biden administration passed a suite of new rules to update the oil program, including a seismic shift in how much money companies must secure to drill on public lands. But whether those rules are enacted in the long term is being fought in a series of lawsuits.
Bonding is a type of insurance that a company must buy before it’s permitted to drill for oil and gas. In the event of a bankruptcy, Interior Department agencies could seize those bonds to pay for plugging wells and cleaning up pipelines.
The Bureau of Land Management passed a regulation in April — required by the Inflation Reduction Act — increasing the minimum bond for a single lease from a $10,000 minimum set in 1960 to $150,000. The statewide bond minimum was raised to $500,000, a 20-fold increase.
The Biden administration argued the increases will ensure orphaned wells aren’t paid for by the taxpayer. The 2021 bipartisan infrastructure law created a $4.7 billion program to clean up old wells across the U.S., which likely covers only a fraction of abandoned wells, according to Environmental Protection Agency estimates.
Shannon Anderson, an attorney with the Wyoming landowners group the Powder River Basin Resource Council, said reforms such as higher bonding have been on the wish list for advocates for years.
“This was the administration that got it done,” she said.
The Bureau of Land Management said in a statement that it took “a balanced, responsible approach” in its new regulations, which offer a phase-in period for the higher bonding on existing leases. Its overhaul “provides transparency and clarity for industry, while helping the BLM to better manage public lands for other important resources and uses,” the agency said.
The Western Energy Alliance and five other oil groups sued in May over the onshore bonding rules.
“Those bond amounts are so out of proportion with the number of orphan wells on federal lands. I don’t see how a judge doesn’t find that to be arbitrary and capricious under the Administrative Procedure Act,” Sgamma said.
If the rules succeed, she said it could lead to bankruptcies in the federal oil and gas business and fewer operators for federal lands.
Offshore, there’s a similar fight, after the Bureau of Ocean Energy Management passed new rules in April requiring as much as $6.9 billion in supplemental bonds from some operators.
In a twist, oil companies are split on whether to fight the new regulations or support the Biden administration.
Midsized operators that often own high numbers of less lucrative and older wells in the Gulf of Mexico say Biden aims to drive them out of business. But some of the countries’ largest oil companies are supportive of Biden’s shift, which could shield them from paying for wells and platforms they sold years — even decades — prior.
Several enormous bankruptcies of smaller companies have put old companies on the hook for clean-up costs in the billions.
Republican attorneys general from Louisiana, Texas and Mississippi, as well as a coalition of oil industry groups, have sued to overturn the offshore rules.
“Louisiana is deeply impacted by this deeply flawed policy,” Louisiana attorney general Liz Murrill said in an emailed statement. “Independent oil and gas producers play an important part in our national energy supply, and they are certainly important to Louisiana. I will fight flawed energy policy that hurts our state and our nation, and this policy does both.”
In contrast, the American Petroleum Institute, a major oil and gas industry group, has requested to join the lawsuit defending the Biden rules.
“Financial assurance is a crucial part of offshore development and our industry’s commitment to maintaining safe and responsible operations,” said Holly Hopkins, API’s vice president of upstream policy, in a statement. “API, representing the majority of U.S. offshore oil and gas production, is prepared to help defend it.”
Elmer Danenberger, former chief of engineering and operations for Interior’s offshore oil program, said in an email that the new bonding policy from Biden is “appropriate and desirable.”
But Danenberger, who now writes a blog covering offshore energy development, said the Biden administration also made a serious mistake in the rules. The administration reversed an earlier policy that decided whether a company needs to put down more bonding based in part on a company’s safety and compliance record.
Those records are the best marker of when an oil company is at risk, he said.
Still drilling
One area of the federal oil patch the Biden administration failed to directly touch: oil and gas drilling on public lands.
That’s a significant departure from Biden’s campaign platform in 2020, when he promised to go aggressively after the flow of oil from federal acreage.
The number of onshore wells approved under Biden fluctuated year by year — with almost 12,000 total wells approved since he took office — but the results have been comparable to the Trump era, even eclipsing in some instances the Trump administration’s period of so-called “energy dominance.”
Additionally, Biden approved a compromise in the IRA that ensures oil companies will likely continue to purchase leases on federal lands and in federal waters for years. Under the law, new auctions for offshore wind and rights of way for onshore renewables are only allowed if Interior has held recent oil sales.
The deal, demanded by Sen. Joe Manchin (I-W.Va.) for his vote for the historic climate legislation, was fiercely opposed by environmental groups and cast a shadow on Biden’s approach to managing the federal oil program.
Peter Hart, the national communications manager for the nonprofit Food & Water Watch said at the time that “the IRA reinforces the deluded idea that we can secure real climate victories by both ramping up clean energy and continuing to approve new fossil fuel projects.”
But some advocates view Biden’s oil legacy as largely positive.
Wyoming’s Anderson said Biden worked within the limits of the nation’s dependence on oil and gas, the IRA deal and federal law, while still achieving “huge” gains on regulatory changes.
“The political campaign rhetoric met reality,” she said of his presidency.
Squillace, the former Interior official, said Biden missed a key opportunity to create a road map for the federal oil program’s eventual retirement alongside the decline of reliance on oil. But making compromises to keep oil development going on public lands was a “pretty smart” strategy for the Biden administration, he said.
“It’s pretty clear that we are not going to see a total shutdown of the oil and gas industry,” Squillace said. “The United States probably ought to continue to develop it while there’s demand.”
