Biden administration drilling plan may exclude all waters beyond Gulf of Mexico

© Reuters. FILE PHOTO: Unused oil rigs sit in the Gulf of Mexico near Port Fourchon, Louisiana August 11, 2010. REUTERS/Lee Celano//File Photo

By Jarrett Renshaw and Nichola Groom

(Reuters) - The U.S. Interior Department has recommended to the White House that all federal offshore oil and gas drilling auctions over the next five years be located in the Gulf of Mexico, where the drilling industry has already been focused for decades, according to two sources familiar with the matter.

The recommendation to exclude all other waters from offshore oil and gas development comes as U.S. President Joe Biden seeks to balance his goal to transition the country away from fossil fuels against a Congressional requirement to hold regular drilling auctions, and intense political pressure to boost energy supplies to ease soaring inflation.

The Biden administration is due to unveil the proposed five-year offshore development plan on Thursday, as mandated by a Congressional deadline. It is unclear if the proposal will match Interior's recommendation to focus solely on the Gulf, or whether the White House made changes to include other regions.

In recent years, the Interior Department has leased areas off the coast of Alaska. And former President Donald Trump had proposed a vast expansion of drilling sales to cover more than 90% of coastal waters, including areas off California that had not been offered since the 1980s and new zones in the Atlantic and Arctic. Those plans were blocked by legal challenges.

Biden, conversely, had campaigned on a promise to end all new federal drilling to combat climate change. But his early efforts to suspend leasing were also blocked in court.

Interior will unveil the draft proposal just ahead of the June 30 expiration of the five-year drilling current plan, and could finalize it by the end of this year after a public comment period. The department will not be able to hold any lease sales until the new plan is in place.

Interior last held an offshore oil and gas auction in November, located in the Gulf of Mexico, but a court order later vacated the sale saying the administration had failed to properly account for its impact on climate change.

Offshore oil and gas production, which occurs mainly in the Gulf of Mexico, contributed about $4 billion in revenue to U.S. coffers last year. The Gulf accounts for about 15% of domestic oil production and 2% of natural gas production, according to the Bureau of Ocean Energy Management.