(The Center Square) – The next sale of oil and gas leases in the Gulf of America is set for March 11, one of dozens scheduled over the next 15 years as part of President Donald Trump’s push to increase domestic oil and gas production.
The One Big Beautiful Bill Act, signed by Trump in July, mandates 30 auctions in offshore waters in the Gulf and six in Alaska’s Cooks Inlet before the end of 2040.
The March sale will open more than 80 million acres on the Outer Continental Shelf, as did the first auction in the series, livestreamed from New Orleans in December.
In that sale, 30 companies submitted 219 bids totaling $372 million, according to the Bureau of Ocean Energy Management.
The next sale supports an executive order signed by Trump in January 2025 that directs federal agencies to accelerate offshore energy development.
The money raised in the first sale in December, when the price of oil in the U.S. was near a multi-year low of $58 per barrel, was less than the $442 million in sales seen at the previous auction in 2023.
Caitlin Shaw, director of Gulf of America research at consultancy Wood Mackenzie, said in a research note that most oil and gas companies targeted their bids on specific blocks in areas known to have potential production.
With a lag time of six to 10 years before a lease is typically turned into production, the exploration acreage secured in the first sale will not impact the nation’s oil output until the early to mid-2030s, according to Woods Mackenzie.
“Seeing these companies using this opportunity to refill those exploration hoppers is really, really exciting because that means in the 2030s we could see some meaningful production come back based on the success of that exploration activity,” said Shaw.
Gulf oil production is expected to peak in 2026-2027 at approximately 2.6 million barrels of energy equivalent per day.
BP topped all bidders in the December sale, with over $60 million offered on 51 blocks. Chevron was second with submissions totaling $52 million for 24 blocks, and Woodside Energy was the third-largest bidder at $38 million.
Most of the bidding focused on acreage in the Keathley Canyon off the Louisiana coast and in the Mississippi Canyon, both with long histories of deepwater oil and gas production.
Revenues from offshore energy activities provide funding for the U.S. Treasury, Gulf Coast states, the Land and Water Conservation Fund and the Historic Preservation Fund. In fiscal year 2024, offshore development generated $6.5 billion in royalties, $372.5 million in bonuses and $122.8 million in rental payments.
The Gulf of Mexico Energy Security Act of 2008 specifies that revenue from auctions like the upcoming one is shared among four Gulf-producing states: Louisiana, Texas, Mississippi and Alabama. The distribution of the funds is determined by a formula based on the state’s distance to the offshore lease sites, with Louisiana receiving the largest share, Texas second, followed by Mississippi and Alabama.
By law, these states must use the revenue to mitigate the impacts of offshore energy production, including coastal restoration and protection, hurricane protection, onshore infrastructure such as sewer and water systems directly affected by coastal wetland loss, mitigation of environmental damages and resilience planning.
