Make America Drill Again
President Trump is acting on his pledge to make the United States energy independent by opening additional federal waters to drilling. The Department of the Interior announced its plans to offer for sale leases of “all available” federal waters in the Gulf of Mexico that are not already leased out for offshore drilling. Ten offerings are expected to be held over the next five years. The first sale, in August, will include 73 million acres.
This announcement follows a separate sale held for leases in the Central Gulf of Mexico in mid-March. While the sale did not set any new records, the strong bids submitted by 28 oil companies were widely interpreted as showing growing optimism that a recovery for offshore drilling may be on the horizon. The $275 million in high bids surged past the historically low results seen at a sale for the same area last year. That sale took place around the time that crude oil bottomed out at $26/barrel. More recently, following OPEC’s agreement to slash production, the price has hovered around $50/barrel. Lease sales are closely watched by industry insiders because they offer a view into oil producers’ long-term outlook on oil and gas price trends, as well as the cost to develop a prospect.