Biden admin to hold first onshore drilling auctions in blow to climate agenda

June 28 (Reuters) - The U.S. Interior Department this week will hold its first onshore oil and gas auctions since President Joe Biden took office, a setback to his administration's early efforts to end federal drilling to fight climate change.

The lease sales will run Wednesday to Thursday and will cover more than 140,000 acres (570 square kilometers) across eight Western states, posing a test of the drilling industry's demand for new prospects at a time of soaring global energy prices.

Over 90% of the acreage will be in big oil producing state Wyoming, with the rest sprinkled across Colorado, Montana, Nevada, New Mexico, North Dakota, Oklahoma, and Utah.

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A federal judge last year effectively compelled the auctions by blocking the Biden administration's decision to suspend the federal oil and gas leasing program over its climate impacts.

Biden had campaigned on a promise to end federal drilling to fight global warming, but has since urged oil producers to rapidly ramp up output to help consumers suffering from record prices at the pumps.

The Interior Department had held an offshore drilling auction late last year, but a different federal judge annulled that sale saying the administration failed to properly factor climate change into its analysis - a clashing legal signal that underscores how contentious the program has become.

Biden's Interior Department initially proposed 340,000 acres for this week's auctions, but gradually removed parcels it said were too environmentally sensitive.

The Department will also require companies to pay royalties of 18.75% on production from the acreage, up from the 12.5% in place for decades.

This week's auctions are a fraction of the size of those held under former President Donald Trump, a major supporter of the fossil fuel industry. Trump's Interior Department offered 26 million acres to drillers over four years.

In 2021, federal lands accounted for nearly 10% of U.S. oil and gas production.

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Reporting by Nichola Groom Editing by Marguerita Choy

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