Oil companies secured drilling rights in the Gulf of Mexico with a winning bid totaling $382 million on Wednesday. This development followed legal challenges to the Biden administration’s attempts to reduce the sale for the protection of an endangered whale species.
The auction, the final one mandated by the 2022 climate law, reflects the Biden administration’s delicate balancing act between the interests of energy companies seeking increased oil and gas production and environmental activists advocating for a halt to new drilling to combat climate change.
Major players such as Chevron, Hess, and BP participated in the bidding for over 300 parcels covering 2,700 square miles (7,000 square kilometers), as reported by the U.S. Department of Interior’s Bureau of Ocean Energy Management.
The successful bids marked a significant uptick from the previous sale in March 2023, where leases covering about 2,500 square miles (6,500 square kilometers) were awarded for $250 million.
Despite industry frustration and Republican criticism over perceived hindrances to U.S. oil production, the next sale is scheduled for 2025.
The online auction, initially planned for September, faced delays due to a court battle following the administration’s reduction of available lease acreage from 73 million acres (30 million hectares) to 67 million acres (27 million hectares) to safeguard the endangered Rice’s whale.
Legal challenges from Chevron, Shell Offshore, the American Petroleum Institute, and the state of Louisiana sought to reverse the acreage cut and block whale protection measures in the lease sale provisions. A federal judge in Louisiana ordered the sale to proceed without whale protections, a decision upheld by the 5th Circuit Court of Appeals.
The compromise leading to the sale was reached with Democratic Sen. Joe Manchin, a supporter of the oil and gas industry, who played a pivotal role in the passage of the climate law. Under the compromise, the government must offer at least 60 million acres of offshore oil and gas leases annually before offering offshore wind leases.
While environmental groups criticized the five-year plan for not doing enough to curtail oil and gas drilling in the Gulf of Mexico, industry representatives emphasized the need for more and earlier sales to secure leases vital for U.S. economic interests.
Holly Hopkins, API vice president of upstream policy, lauded Wednesday’s sale as a “positive step” and highlighted its record-breaking dollar value for bids in nearly a decade. She emphasized the industry’s commitment to meeting growing demand and securing long-term energy security for the nation.
Recent setbacks to the administration’s clean-energy goals, including project cancellations off the New Jersey coast, underscore challenges in realizing ambitious renewable energy targets.