Florida Objects, But Another Offshore Lease Proposed

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Written by Daniel Graeber for IIR Energy Intelligence (Sugar Land, Texas)

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Summary

The Trump administration proposed its third lease sale for the U.S. Gulf Coast, despite some opposition from Republicans. The White House says offshore exploration is good for security and the economy.

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Not Everyone is Pleased

Leaders from Florida were quick to condemn proposals from the Trump administration to open up waters off the U.S. Gulf Coast, many of which are from his own party.

The City Council of Clearwater, Florida, last week signed a letter in opposition to the latest federal plans for offshore drilling.

"The protection of our coastal environment and economy is a priority for Clearwater, and the long-term well-being of our community outweighs the short-term benefits that expanded offshore drilling might offer to the oil and gas industry," the letter read.

In December, the entire Florida congressional panel, including Republicans, were critical of plans to drill offshore, with Governor Ron DeSantis urging the Trump administration to honor a ban from his first administration on drilling off the state's western shores until 2032.

Florida has few natural resources of its own. The U.S. Energy Information Administration (EIA), part of the U.S. Department of Energy, put Florida's crude oil production at around 1 million barrels annually. The state doesn't even have its own refineries or pipelines for refined petroleum products.

But on Thursday, the Bureau of Ocean Energy Management (BOEM), part of the Interior Department, proposed auctioning off some 15,000 blocks covering 80.4 million acres offshore. The government said offshore leases are financially beneficial and support the U.S. position as a global energy superpower.

"Energy independence is a cornerstone of U.S. sovereignty, economic strength, national security, and global stability, boosting American energy dominance and reducing reliance on unstable foreign producers," the government stated. "By continuing to expand offshore capabilities, the United States ensures affordable energy for consumers, strengthens domestic industry and reinforces its role as an energy superpower."

Addressing some Floridian concerns, meanwhile, the government said it would exclude areas set aside in a memorandum from 2020 during President Donald Trump's first term, including the Flower Garden Banks National Marine Sanctuary.

Drilling off Florida's coast would not only wreck tourism and the environment, but pose national security concerns because of the military training grounds offshore. But offshore is the only meaningful source of growth in U.S. crude oil production.

Offshore Oil Production Growing

In its monthly market report for February, EIA analysts said they expected no change in net production from 2025 levels, which averaged 13.6 million barrels per day (BBL/d). Net production declines to 13.32 million BBL/d by 2026, with nearly all of the decline coming from the shale basins in the Lower 48 states.

Alaska's production is expected to expand 12% from 2025 levels to reach 470,000 BBL/d and then expand again by 6.4% to reach 500,000 BBL/d next year. Offshore production is on pace to increase by 4.2% to reach 1.98 million BBL/d this year, but then decline 5.5% to 1.87 million BBL/d.

At an estimated 10.98 million BBL/d for 2027, inland shale production is on pace to drop by around 3% from year-ago levels. With U.S. crude oil prices projected to drop below $50 per barrel by next year, the shale sector is facing headwinds.

Offshore barrels, however, are lower cost and lower carbon. Pointing to its reserve potential, Australian energy company Woodside, working alongside British energy giant BP, said its portfolio was lifted in part by offshore barrels.

BP in its report for the fourth quarter said production last year was relatively unchanged from 2024 levels. Woodside said a final investment decision on waterflooding at the BP-led Atlantis platform off the U.S. Gulf Coast added 15,000 barrels of oil equivalent per day (Boe/d) to its production average. The field was discovered in 1998, and the Atlantis platform is one of BP's long-serving facilities in the U.S. Gulf.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Database can learn more about Atlantis here and here.

Under Trump's signature spending bill from last year, BOEM is mandated to hold 30 offshore lease sales over the coming years. The first lease under the program generated just over $300 million in high bids. In 2023, the last lease under former U.S. President Joe Biden generated high bids of $382 million.

The break-even price for U.S. offshore operations is generally lower than for shale, with an average of around $58 per barrel, though it's as low as $20 in some places. West Texas Intermediate, the U.S. benchmark for the price of oil, is expected to average $52.21 per barrel this year. It was trading at $66 per barrel early Friday, supported largely by the geopolitical risk stemming from the possibility of U.S. military strikes on Iran.

By the Numbers

• $58 per barrel break-even offshore
• $382 million in high bids from Biden's last offshore lease sale
• 4.2% annual increase in offshore production expected

Key Takeaways

• Florida opposes offshore drilling.
• Trump announces third proposed lease.
• Offshore is the only place for meaningful production growth.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).