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The
outcome of the lease sale will provide the last big signal from
the industry about their interest in U.S. waters before
President Donald Trump's Interior Department releases a
long-awaited proposal to expand offshore drilling, possibly to
new areas of the Atlantic, Pacific and Arctic.
Wednesday's sale will include all available unleased areas in
federal waters of the Gulf of Mexico, or about 78 million acres
(31.5 million hectares) off the coasts of Texas, Louisiana,
Mississippi, Alabama and Florida.
It is the fourth sale of its size in the agency’s 2017-2022
program, a crucial part of the Trump administration's "energy
dominance" agenda to open up more federal land and waters to
energy exploration.
Gulf of Mexico lease sales held under the Obama administration
included far less acreage, but typically yielded more interest
and revenue - a difference that can be explained by a decline in
oil prices and a recent boom in easier-to-extract reserves
onshore.
In the last three sales, for example, 1 percent or less of the
acreage offered received bids, compared to 1.6 to 4.3 percent
for the last three Central Gulf lease sales under Obama.
Combined, the three most recent sales also generated nearly $424
million in high bids, less than half what individual sales in
the Central Gulf brought in 2013 and 2014 when oil prices
averaged close to $100 a barrel.
The U.S. government estimates the Outer Continental Shelf in the
Gulf of Mexico contains about 48 billion barrels of undiscovered
technically recoverable oil and 141 trillion cubic feet of
undiscovered technically recoverable gas.
But most of the recent U.S. boom in oil production has been
focused onshore, where it is cheaper to drill than in deepwater.
The Department of Interior last year proposed opening up nearly
all remaining U.S. offshore waters to drilling, including in the
Atlantic, Pacific and the Arctic - despite opposition from
nearly every coastal state affected and little evidence of
interest from the oil industry.
After taking feedback, the department is expected to release its
final proposal on its drilling plan in the coming weeks.
(Reporting by Nichola Groom; Editing by Susan Thomas)
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