Chevron USA Inc. offered seven of the 10 highest bids Wednesday for drilling rights in a Gulf of Mexico auction that attracted a total of $309,798,397, a sale mandated by last year’s “climate commitment” law.
BP Exploration & Production Inc., Equinor Gulf of Mexico llc and a multi-member bidding pool collect the 10 highest individual bids for the sale of leases 259. Mandated by the Inflation Reduction Act (IRA) of 2022 to be held before March 31, 2023. , the auction offered 313 tracts totaling 1.6 million acres, roughly the size of the state of Delaware, in federal waters. Bids deemed “high bids” by the Bureau of Ocean Energy Management (BOEM), which received bids from 32 companies, totaled $263,801,783.
BOEM’s latest assessment, conducted in 2021, estimated that the Outer Continental Shelf of the Gulf of Mexico contains 29.59 billion barrels of oil and 54.845 trillion cubic feet of gas at average levels of undiscovered technically recoverable resources.
Block 96 in Keathley Canyon received the highest individual bid, from Chevron at $15,911,947. The same company submitted the second and third highest bids, for Green Canyon Block 724 at $10,891,423 and Green Canyon 160 at $7,123,712, as well as the sixth to ninth highest bids.
BP offered the fourth highest bid, for block 340 of Keathley Canyon at $6,503,103. A bidding group consisting of Beacon Offshore Energy, Exploration llc, Houston Energy lp, Red Willow Offshore llc and Westlawn GOM Asset 1 Holdco llc had the fifth highest, for Mississippi Canyon Block 804 at $5,025,777. Equinor offered the tenth highest bid, for block 148 of Walker Ridge at $3,099,199.
In terms of total high bids, Chevron was the biggest name with $107,957,492, followed by BP with $46,609,286 and Shell Offshore Inc. with $20,147,556.
A provision of the IRA that prioritizes fossil fuels prohibits a lease for offshore wind energy development unless “an offshore lease sale has taken place during the one-year period ending on of the issuance of the lease for offshore wind development”. Another condition requires that the total acres offered in offshore lease sales during the year leading up to the issuance of any offshore wind development lease must reach 60,000,000 acres.
Leases granted under Lease Sale 259 for water depths of 2,624.67 feet or less have an initial term of five years. Deeper drilling earns an initial 10-year contract.
“The leases resulting from this sale will include stipulations to mitigate potential adverse effects on protected species and avoid potential conflicts with other ocean uses in the region,” BOEM said.
“Revenues received from offshore oil and gas leases (including elevated bids, rental payments, and royalty payments) go to the US Treasury, to certain Gulf Coast states (Texas, Louisiana, Mississippi and Alabama) and local governments, the Land and Water Conservation Fund and the Historic Preservation Fund.”
The next drilling auction in the Gulf of Mexico is scheduled for September 2023, for lease sale 261.
“Gulf of Mexico Oil and Gas Lease Sale 261 will offer approximately 13,620 blocks on 73.4 million acres on the U.S. Outer Continental Shelf in the Western, Central and Eastern Planning Areas,” said the BOEM in a press release on March 10.
“Climate commitment”
The IRA, passed in August 2022, is billed as a “climate compromise” law that seeks to strike a balance between energy security and climate resilience. The legislation aims to accelerate or incentivize the development of both fossil fuels and renewables such as wind energy, among other provisions.
The Interior Department announced in February what it called “the first offshore wind lease sale in the Gulf of Mexico.” Bidders have until April 25 to submit their qualification materials to BOEM.
“The Proposed Notice of Sale (PSN) announced today includes a 102,480-acre area on the shores of Lake Charles, Louisiana, and two areas off the coast of Galveston, Texas, one 102,480 acres and the other 96,786 acres” , the department said in a press release in February. 2022.
Along with the IRA investments and the bipartisan Infrastructure Act, the planned sale will “boost offshore wind deployment beyond the East Coast, increase U.S. leadership in floating offshore wind technologies, and create jobs well wages for workers across the country,” White said. House said in a statement the same day.
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