BP, Chevron and Shell were among the top bidders on Wednesday at the US Government’s first sale of oil and gas drilling rights in the Gulf of Mexico since 2023.
The auction, which ended with $279.4 million in high bids, was the first of 30 mandated by US President Donald Trump’s tax cut and spending bill, which he signed into law in July.
His administration’s plans for offshore leasing are a significant departure from that of his predecessor, President Joe Biden, which had planned for a historically small number of oil and gas auctions as part of an effort to move away from fossil fuels and address “climate change”.
"We're entering a new era of offshore American energy dominance," Matt Giacona, acting director of the US Bureau of Ocean Energy Management (BOEM), said at the start of the auction, which was broadcast online.
BOEM said 30 companies submitted a total of 219 bids on 1.02 million acres, about 1.3 per cent of the acreage offered. BP was the most frequent bidder, according to sale documents, followed by Chevron and Shell.
Other top bidders included Anadarko, LLOG Exploration Offshore, Talos Energy and Murphy Exploration Production.
The auction’s highest bid was nearly $18.6 million, from Chevron, for a block in the Keithley Canyon deepwater area. The second highest was a joint bid of $15.2 million from Woodside Energy Deepwater and Repsol for a block in the Walker Ridge area.
BOEM, an arm of the Interior Department, offered 81.2 million acres (32.9 million hectares) in the Gulf at a royalty rate of 12.5 per cent, the lowest permitted by Trump’s new tax law.
Previously, as mandated by Biden’s 2022 inflation reduction act, oil companies were required to pay a minimum of 16.66 per cent in royalties to the US Treasury, states and other federal funds.
Trump’s law lowered the rate to encourage industry participation in lease sales. US crude oil prices are down about 20 per cent this year, which can limit investment by drillers, though technological innovations in deep-sea drilling are expected to help boost Gulf production.
Offshore production accounts for about 15 per cent of US output, but has lagged onshore shale fields in recent years because of longer timelines and higher upfront costs.
The last Gulf sale in 2023 attracted 352 bids by 26 companies covering 1.73 million acres (700,000 hectares). It raised $382 million, the highest of any federal offshore lease sale since 2015.
(Reporting by Nichola Groom Editing by Bill Berkrot)
