White House opens Gulf of America to highest oil bidders
Winning bidders will pay just 16.67% for both shallow and deepwater leases, the minimum required by law and a significant drop from the 18.75% rate Biden’s administration charged for deepwater drilling.
President Trump’s decision to rebrand the Gulf of Mexico as the “Gulf of America” in January wasn’t just about bragging rights.
It was a preview of an aggressive energy strategy now taking shape following the administration ‘s announcement last week of an 80-million-acre oil lease sale.
Scheduled for December 10, the auction will offer approximately 15,000 unleased blocks spanning an area larger than the United Kingdom.
Companies can bid on drilling rights located anywhere from 3 to 231 miles offshore, in waters ranging from 9 feet to more than 11,100 feet deep.
Unlike his predecessor, Trump is offering companies the lowest royalty rates in nearly two decades.
Winning bidders will pay just 16.67% for both shallow and deepwater leases, the minimum required by law and a significant drop from the 18.75% rate Biden’s administration charged for deepwater drilling.
Biden’s Interior Department had canceled various offshore lease sales and created what industry critics called the most restrictive offshore lease plan in American history.
His five-year program included just three Gulf sales from 2024 to 2029, a historically low number that frustrated oil companies and drilling states.
“To support robust industry participation, lower production costs, and unleash the full potential of the Gulf of America’s offshore energy reserves, BOEM is proposing a royalty rate of 16⅔ percent for both shallow and deepwater leases,” said Laura Robbins, BOEM’s Acting Regional Director for the Gulf of America.
Announced on Wednesday by the U.S Bureau of Ocean Energy Management, a 60-day public comment period begins June 27, allowing affected state governors and local governments to submit feedback on the proposal.
Interior Secretary Doug Burgum positioned the lease sale as economic relief for Americans struggling with high costs.
“Unlike under President Biden, we will not leave our critical energy resources locked up when so many Americans are suffering through the unnecessarily high cost of living imposed by the previous administration,” Burgum said.
“Unleashing America’s energy resources will lower prices at the pump, at the grocery store and across all aspects of American life while strengthening our national security.”
Energy Information Administration officials predict that global oil production is expected to outpace demand through 2026, potentially pushing crude prices down 8% this year and another 11% next year.
The Bureau of Ocean Energy Management officials estimate the Gulf’s outer continental shelf holds about 48 billion barrels of undiscovered oil and 141 trillion cubic feet of natural gas.
