U.S. Gulf Oil & Gas Lease Sale Planned for Wednesday

Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)

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Summary

The first lease sale for oil and gas drilling off the U.S. Gulf Coast is planned for Wednesday. Broader plans from the Trump administration, however, may run up against opposition.

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First Big Beautiful Bill Offshore Lease Sale

The Trump administration plans to hold its first lease sale under his signature spending bill on Wednesday, offering up nearly 80 million acres up for auction off the U.S. Gulf Coast.

The lease sale is the first under the One Big Beautiful Bill Act signed by U.S. President Donald Trump in July. It's the first of 30 sales in the region extending through 2040, steered by the Bureau of Ocean Energy Management (BOEM).

"BOEM is now moving forward with a predictable, congressionally mandated leasing schedule that will support offshore oil and gas development for decades to come," Matt Giacona, the acting director of the agency, said in November when outlining the original lease schedules.

The next few years could be challenging for the domestic fossil fuels sector, despite the overwhelming political support from Trump's administration. His trade policies have upended global markets, and the International Energy Agency (IEA) warned in October of an oversupplied market due in part to subdued demand.

Crude oil prices could be a challenge, too. West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, was trading at about $62.50 per barrel early Tuesday. By next year, the federal government expects WTI to average $51.42 per barrel, below the point at which many drillers can make a profit.

That's expected to create headwinds for the domestic shale sector, with Lower 48 crude oil production expected to decline by about 1.1%, to average 11.13 million barrels per day (BBL/d). Offshore, however, has a lower break-even, with some projects supported even with WTI slightly below $50 per barrel. Gulf oil production is expected to increase annually by 3.1% to average 1.97 million BBL/d.

By the Numbers

• 30 sales in the region to 2040
• 3.1% increase in Gulf oil production by 2026
• 80 million acres up for grabs

Companies are already taking note. Chevron Corporation (Houston, Texas) said last month that about 40% of its capital expenditures for next year would target offshore developments such as the U.S. Gulf Coast and Guyana.

Chevron kicked off 2025 with the start of oil production at its semi-submersible Whale Platform in the deep waters off the coast of Texas. The company believes production will average 100,000 barrels of oil equivalent per day, with 15 wells initiated during the first phase of development.

Chevron holds a 40% working interest in the Whale facility, alongside majority-owner Shell plc (London, England).

Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project and Plant databases can learn more about the Whale development--including capacities, investment values and necessary equipment--in a detailed plant report.

Early Opposition

It's not all good news, however. The broader lease sale calls for opening waters from California to the waters off the western coast of Florida, a central location for air-borne U.S. military training.

Some two dozen California Democrats sent a letter to the federal government announcing its opposition to plans for offshore lease sales. In Florida, rare bipartisan opposition to the lease sale pointed to the risk to state tourism revenue. Apart from that, Floridians are concerned that drilling activity would jeopardize the $20 billion contribution to the state's gross domestic product from the military.

Earthjustice has already led a group suing over a failure to follow the National Environmental Policy Act, which requires public comments, among other things, for offshore leases. "The least you can do is not break the law," Earthjustice said.

Key Takeaways

• Trump's penchant for fossil fuels faces first test.
• Opponents say the administration broke the law.
• Offshore is the only source of meaningful oil production growth.

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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) platform 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 more than 200,000 current and future projects worth $17.8 trillion (USD).