US prepares auction of drilling rights in the Gulf of Mexico

The US will hold an auction of rights to produce oil and natural gas in the Gulf of Mexico, as planned by former President Joe Biden’s administration. It will publish a proposal for the sale in June, the US Department of the Interior said.

The US Bureau of Ocean Energy Management will prepare the auction in accordance with instructions from US Interior Secretary Doug Burgum. It will be part of the five-year leasing plan completed by the Biden administration in 2023.

The programme scheduled just three lease sales in the Gulf of Mexico during that period, a historic low. Oil producers and oil-producing states were unhappy with this.

Biden’s approach

At the end of his term, the former US president also withdrew more than 625 million acres of federal waters from future auctions for oil and gas rights. This is the largest withdrawal of its kind in US history and includes parts of Alaska and the eastern Gulf of Mexico.

The withdrawn areas were not covered by the US Department of the Interior’s five-year programme. No oil or natural gas is being produced in any of them. The Donald Trump administration is, however, reconsidering whether to allow extraction of these resources.

“Unlike during President Biden’s term, we will not leave our critical energy resources locked away while so many Americans suffer from unnecessarily high living costs imposed by the previous administration,” Interior Secretary Doug Burgum said.

Production in the Gulf of Mexico is intended to help lower fuel and food prices in the US while also strengthening US national security, Reuters reports.

“Opening the Outer Continental Shelf is key to this strategy, as it will allow the US to tap domestic energy potential that was blocked under the previous administration. Expanding Outer Continental Shelf leasing will create tens of thousands of well-paid jobs—from exploration and production to services and supply chains,” the US Department of the Interior said in a press release.

Falling oil prices

Oil prices plunged on Friday to around 65 dollars per barrel, their lowest level since 2021. The market reacted to China’s announcement that it would introduce its own retaliatory measures in response to new tariffs.

Developments in oil prices will have a major influence on interest in production in the Gulf of Mexico. According to the latest estimates from the Bureau of Ocean Energy Management (BOEM), the US Outer Continental Shelf holds up to 29.6 billion barrels of oil and more than 1 530 billion cubic metres of natural gas.

Further development of production is being held back not only by falling prices, but also by legal disputes and environmental restrictions. In recent years, legal disputes over the protection of the endangered Rice’s whale have complicated lease sales.

In March this year, a federal court ruled that the Department of the Interior had failed to properly assess the impact of production on the whale or greenhouse gas emissions during last year’s sale. The ruling cast doubt on hundreds of lease agreements already concluded.