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March 22nd, 2018:

U.S. Sale Of Gulf Of Mexico Oil And Gas Lease Draws Weak Response

American Energy Coalition - March 22nd, 2018

“The largest lease sale in American history in the offshore Gulf of Mexico yielded $124.76 million dollars in winning bids from drillers on Wednesday, a modest response to the Trump administration's effort to pump up investment in the region,” according to a Reuters Article published by CNBC.

“The Interior Department had offered up a record 77 million acres (31.2 million hectares) for development with discounted royalty rates on the shallower tracts, as part of a broader effort by President Donald Trump's administration to ramp up U.S. fossil fuels output.”

“But companies bid on just 1 percent of that acreage, and won those tracts with bids averaging $153 an acre - 35 percent below levels at a similar auction last year, and a fraction of those in the region in 2013 when oil prices were much higher,” according to a Reuters review of the data.

“… 33 companies, including majors Royal Dutch Shell Plc, BP Plc, Chevron Corp, and Total SA, had placed 159 bids on 148 blocks.” 

“But critics of the administration called the unusually large lease sale ill-timed. U.S. crude oil and natural gas output is already smashing records thanks to improved drilling technology that has opened up cheaper onshore reservoirs, and Brazil and Mexico are also competing for drilling investment in their own deepwater acreage,” says Reuters and CNBC.

"’Offering a nearly unrestricted supply in a low demand market with a cut rate royalty and almost no competition is bad policy and an inexcusable waste of taxpayer resources,’ the Center for American Progress, a left-leaning policy think tank, said in a statement. It called the sale an ‘embarrassing flop.’” 

Interior Secretary Ryan Zinke had said ahead of the sale that the record-sized offering would be a ‘bellwether’ of industry demand in the region, and billed the effort as a way to help the United States become more ‘energy dominant.’”

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