The Trump administration on Wednesday morning held a new auction for offshore drilling in the Gulf of Mexico, yielding $178 million in winning bids, a modest improvement from its last major lease sale.
The 77 million-acre offering is slightly larger than a similar oil and natural gas lease sale conducted by the Interior Department in March, in what the agency billed as the as the largest offshore drilling sale in U.S. history.
The new sale covered 77.3 million acres and 14,474 unleased blocks, in federal waters off of Texas, Louisiana, Mississippi, Alabama, and Florida. It received 171 bids by 29 companies, with Hess Corporation making the largest bid at $25 million.
In the March 21 sale, companies bid on just 1 percent of the 76.9 million acres that were offered, raising $124.8 million on 159 bids from 33 companies, including Shell, Chevron, Total, and BP.
Interior had hailed the March sale as a satisfying bellwether for the Trump administration’s efforts to massively expand offshore drilling in areas where it’s not currently permitted.
But critics said the sale received modest industry interest, noting companies bid on only 815,403 total acres, which is 46 percent less than the Interior Department expected.
Trump administration officials said Wednesday’s sale was an improvement, and downplayed perceptions of reduced interest in offshore oil and gas drilling.
“I look at it as a positive sale,” Michael Celata, Gulf of Mexico regional director at the Bureau of Ocean Energy Management, told reporters Wednesday morning. “There is obviously continued interest in deep water. Overall, I still think the Gulf is a very viable place.”
But the industry may not be overly interested in offshore drilling, critics say, because it is expensive, risky, and overshadowed by easier-to-access onshore fracking opportunities from the shale boom.
The U.S. is also facing steeper competition from Brazil and Mexico and their offshore Gulf of Mexico areas.
Oil and gas production in the western and central Gulf of Mexico, which accounts for almost all U.S. offshore production, is expected to hit a record high in 2018, after suffering three years of losses.
The Bureau of Ocean Energy Management estimates that offshore resources in the Gulf contain more than 48 billion barrels of oil and 141 trillion cubic feet of natural gas.
The sale conducted by Interior on Wednesday, along with the March sale, are a part of the National Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022, a five-year program established by the Obama administration.
In January, the Trump administration released its own draft offshore leasing plan, proposing to allow oil and gas drilling in nearly all federal waters, that has been widely opposed by coastal governors of both parties fearful of spills. Zinke has since said he plans to modify the plan to cover less territory, and will make a final decision this fall.
