Oil companies offered a combined $264 million for drilling rights in the Gulf of Mexico in a sale last week, which was mandated by last year’s climate bill compromise that prohibited leasing public lands for renewables without first offering acres for fossil fuels, while also raising the royalty rate companies pay.
The Associated Press reports that the auction was the first in the Gulf in more than a year and drew interest from industry giants including ExxonMobil, Shell and Chevron. It could further test the loyalty of environmentalists and young voters who backed President Joe Biden in 2020 but were frustrated by this month’s approval of the Willow drilling project in northern Alaska.
Developing the leases for sale in public waters in the Gulf could produce more than 1 billion barrels of oil and more than 4 trillion cubic feet of natural gas over 50 years, according to a government analysis.
Winning bids Wednesday were 38% higher than the last auction and marked the most received since Gulf-wide bidding resumed in 2017. The amount of acreage receiving bids was comparable to 2021.
There’s another Gulf lease sale scheduled in September. It’s unknown how many more the administration could conduct, which could hinder companies’ expansion plans.
The Department of Interior sale comes two days before a deadline set in last year’s climate bill that Biden signed into law.
ExxonMobil offered the highest bids on 69 tracts in the northwest Gulf. The company in 2021 bid nearly $15 million for tracts in the same part of the Gulf, which includes shallow waters where oil has mostly played out and there are few active leases.
Analysts say the acquisitions appear linked to ExxonMobil’s pursuit of a government-industry collaboration to capture and store carbon dioxide from industrial plants in the Houston Ship Channel. Read the full story.