Companies Bid $192M For Drilling Rights In Gulf Of Mexico

Energy companies including Shell, BP, Chevron and ExxonMobil offered a combined $192 million for drilling rights on federal oil and gas reserves in the Gulf of Mexico on Wednesday, as the first government lease auction under President Joe Biden laid bare the hurdles he faces to reach climate goals dependent on deep cuts in fossil fuel emissions.

Photo Insert: The Gulf of Mexico

The Interior Department auction came after attorneys general from Republican states led by Louisiana successfully challenged a suspension on sales that Biden imposed when he took office, Matthew Brown and Janet McConnaughey reported for the Associated Press (AP).

Companies bid on 308 tracts totaling nearly 2,700 square miles (6,950 square kilometers). It marked the largest acreage and second-highest bid total since Gulf-wide bidding resumed in 2017.

Driving the heightened interest are a rebound in oil prices and uncertainty about the future of the leasing program, industry analysts said. Biden campaigned on pledges to end drilling on federally owned lands and waters, which includes the Gulf.

“Prices are higher now than they’ve been since 2018,” said Rene Santos with S&P Global Platts.

“The other thing is this fear that the Biden administration is here for another three years. They’re certainly not going to accelerate the number of lease sales and they could potentially have fewer sales.”

It will take years to develop the leases before companies start pumping crude. That means they could keep producing long past 2030, when scientists say the world needs to be well on the way to cutting greenhouse gas emissions to avoid catastrophic climate change.

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