Congress directs Interior to hold Cook Inlet lease sale this year

Previous Cook Inlet lease sales have been canceled due to lack of industry interest. (Sabine Poux/KDLL)

The U.S. Department of the Interior will be required to hold an oil and gas lease sale in Cook Inlet before the end of the year.

That’s according to a section of the new Inflation Reduction Act, passed by the U.S. House on Friday.

The 730-page act, awaiting President Joe Biden’s signature, tackles tax and health reform. Environmental groups are celebrating its big investments in renewable energy.

But the act also requires the Interior Department to hold several oil and gas lease sales this year — including a long-contested sale in Cook Inlet.

Previous plans for Cook Inlet lease sales have always come with the qualifier that they could be canceled due to lack of industry interest. And they have been, repeatedly — most recently this year, as well as in 2006, 2008 and 2010.

But the new act said the lease sale must go forward before Dec. 31, 2022. That means the Bureau of Ocean and Energy Management, which oversees the offshore program, can’t change or cancel the sale regardless of whether they think they’ll get bids, said Liz Mering, advocacy director for Cook Inletkeeper.

“However, just because BOEM holds a sale, doesn’t actually mean anyone will show up to bid,” she added.

The lease sale requirement was added into the act by Sen. Lisa Murkowski and West Virginia Democrat Sen. Joe Manchin, said Murkowski spokesperson Hannah Ray. The latest iteration of the Inflation Reduction Act was a compromise between Manchin and Sen. Majority Leader Chuck Schumer, of New York.

Ray said the goal of the provision is to remedy the decision earlier this year to cancel the sale and to make sure that won’t happen again.

Before it can put out a request for bids, the bureau has to release a final environmental impact statement, as well as a final plan and a record of decision.

“It means that BOEM will kind of have to act expeditiously in order to start complying with the steps that are directed,” Mering said.

The sale falls outside the agency’s typical five-year window for lease sale plans.

There was no sale during the previous five-years period, which ended this summer. A new draft plan, released in July, does float the idea of a lease sale in Cook Inlet in 2026.

The Inflation Reduction Act also raises the minimum royalty rate for offshore oil and gas leasing for the first time in over a century, from 12.5% to 16.5%. That rate is the percentage of revenue that oil and gas producers have to pay the government based on the amount of fuel they get out of the ground on any slice of federal land or the ocean floor.

But the act does place a new cap on those royalties, at 18.75%.

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