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Gulf of Mexico Drilling Rights Up for Grabs in Landmark Auction

The U.S. Department of the Interior is scheduled to auction off drilling rights in the Gulf of Mexico, after which a two-year suspension of all drilling auctions will go into effect. 

For oil and gas companies, it will be their last chance to get into the Gulf of Mexico drilling action until 2025. The two-year suspension of drilling auctions could trigger renewed interest in snapping up drilling rights that will be unobtainable immediately following. 

The auction is part of a mandate enshrined in climate law and stoically upheld by federal courts despite opposition to the Department’s compliance.

The DoI will put up for auction lease rights to 73 million acres beginning at 10:00 a.m. ET on Wednesday, following legal battles over the DoI’s proposal to hold back 9% of the total area that serves as habitat for the Rice Whale and impose vessel traffic limitations. The 5th U.S. Circuit Court of Appeals in New Orleans, however, disallowed those provisions, upholding a lower court’s order that the U.S. Administration should hold an expanded oil and gas lease sale in the Gulf of Mexico as initially intended. It did, however, give the DoI an extension for holding the auction. 

The next lease sales won’t occur until 2025, then again in 2027 and 2029. The every-two-year schedule is down from the annual or semi-annual auctions of the past.

“The administration has thrown up roadblock after roadblock to discourage offshore oil and natural gas production, underscoring the importance of this court-ordered sale as the final opportunity to obtain acreage in federal waters until 2025 at the earliest,” American Petroleum Institute (API) vice president of upstream policy Holly Hopkins told Bloomberg.

By Julianne Geiger for Oilprice.com

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  • George Doolittle on December 19 2023 said:
    Exxon Mobil apparently going all in on offshore Canada Maritimes so this won't be stopping that. North Sea already a proven play. Right to infer offshore oil drilling the way to go to create massive quantities of product although I don't think the USA can refine more than 20 million barrels of oil per day. Long Valero strong buy.

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