HOUSTON: A US government auction of oil and gas drilling rights in the Gulf of Mexico generated US$263.8mil (RM1.17bil) in high bids, the most of any sale in the region for years and the first test of demand for investment since the Russian invasion of Ukraine.
The Bureau of Ocean Energy Management offered 73.4 million acres in the US Outer Continental Shelf in the Gulf. Bids were read at a livestreamed event with Chevron Corp, ExxonMobil Corp and BP Plc among the top buyers.
The auction fulfils a provision in president Joe Biden’s 2022 climate change law, the Inflation Reduction Act or IRA, that protects federal oil and gas leasing and requires that a Gulf sale be held by today.
It was the first in the oil-rich region since late 2021. Biden had pledged to end new leasing during his presidential campaign as part of his goal to decarbonise the US economy by 2050. But he has faced pressure to increase domestic supplies of oil and gas to reduce price spikes and boost energy security.
The high bid total was the largest since a 2017 sale in the Central Gulf area garnered US$274.8mil (RM1.2bil), but the price per acre of US$157 (RM694) was about half what companies paid six years ago.
Energy research firm Wood Mackenzie said the results demonstrated optimism for development in the region. About 2.3% of the acreage offered received bids from more than two dozen companies. Of the 313 tracts that received bids, just 30 received two or more bids.
Environmental groups including Earthjustice and Friends of the Earth said the government was prioritising the oil and gas industry above the nation’s climate goals and health of Gulf coast communities.
An oil and gas industry group, the National Ocean Industries Association, said the sale “is an opportunity to strengthen our national security interests and develop domestic energy supplies in the face of uncertainty”. — Reuters