First Gulf of Mexico lease sale under Biden gathers over $191 million in high bids

The U.S. government agency Bureau of Ocean Energy Management (BOEM) has held the first oil and gas lease sale for acreage in federal waters in the Gulf of Mexico under the Biden administration, resulting in more than $191 million in high bids.

The U.S. government announced it was preparing for an oil and gas lease sale for approximately 15,135 unleased blocks located from 3 to 231 miles offshore in the Gulf of Mexico on 30 September 2021. The lease sale was scheduled to be live-streamed from New Orleans on 17 November 2021.

The Lease Sale 257 was the eighth offshore sale held under the 2017-2022 National OCS Oil and Gas Leasing Program. BOEM informed on Wednesday that the Gulf of Mexico Lease Sale 257 had generated $191,688,984 in high bids for 308 tracts, covering 1.7 million acres in federal waters of the Gulf of Mexico.

Furthermore, the Lease Sale 257 offered approximately 15,148 unleased blocks located from three to 231 miles offshore, in the Gulf’s Western, Central and Eastern Planning Areas in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters).

The agency explained that the following areas were excluded from the lease sale: blocks subject to the congressional moratorium established by the Gulf of Mexico Security Act of 2006; blocks that are adjacent to or beyond the U.S. Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap; and whole blocks and partial blocks within the boundaries of the Flower Garden Banks National Marine Sanctuary. 

The government agency claims that a total of 33 companies participated in the lease sale, submitting $198,511,834 in total bids. In addition, the leases resulting from this sale will include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential conflicts associated with oil and gas development in the region.

BOEM also confirms that revenues received from offshore oil and gas leases are directed to the U.S. Treasury, certain Gulf Coast states (Texas, Louisiana, Mississippi and Alabama) and local governments, the Land and Water Conservation Fund and the Historic Preservation Fund.

This sale was consistent with a U.S. District Court’s preliminary injunction, while the government appeals the decision. President Joe Biden paused new oil and natural gas leasing on public lands and offshore waters in January until an analysis of their impacts on the environment and value to taxpayers could be completed.

However, a federal judge ordered a resumption of auctions in June. The decision was justified by citing the Outer Continental Shelf Lands Act, which outlines that the government is required by law to offer acreage to the oil and gas industry.

The Biden-Harris administration is continuing its comprehensive review of its offshore and onshore oil and gas leasing programs and initiating reforms. Therefore, BOEM will use updated greenhouse gas emission models in the future to take substitution impacts and foreign oil consumption into account.

This is expected to result in robust projections of the climate impacts of offshore lease sales and provide an analysis of the social cost of carbon to better understand the true impacts of fossil fuel leasing decisions.

Another potential oil and gas lease sale was announced on 24 August 2021 by the Department of the Interior. On 29 October 2021, BOEM opened a 45-day public comment period to seek input on a revised draft Environmental Impact Statement (EIS), analysing the possible environmental impacts of a potential oil and gas lease sale in the Cook Inlet area, off Alaska. This is scheduled to end on 13 December 2021.

The received comments will be properly analysed and used for the preparation of the final EIS.