The biggest ever lease sale of US offshore acreages for oil and gas development yielded less than record results on Wednesday, according to Reuters.
As part of the US government’s push to maximise energy output in the name of boosting the economy and reducing dependence on foreign fuel, the auction saw the Department of the Interior (DOI) offer a total of 77 million acres in the US Gulf of Mexico.
Discounted royalty rates were offered for shallow-water sites.
Almost three dozen companies – including giants such as Chevron, Shell, BP and Total – joined the bidding, placing 159 bids on 148 blocks.
But they took up just one percent of the total acreage and at an average bid rate of $153 per acre – more than a third lower than that for a comparable auction in 2017.
Total value of the winning bids was $124.76 million.
Part of the reason for the disappointing result is that US oil and gas output is already at record levels thanks to technological advances that have led to a bonanza of onshore production.
Also Brazil and Mexico have been auctioning their own competitive offshore acreages.
Part of the administration’s energy push is to open up almost all federal coastal waters to drilling but that has encountered much resistance from governors and interest groups in most coastal states.