The largest lease sale in American history in the offshore Gulf of Mexico has yielded $124.76m in winning bids on Wednesday.
The Department of the Interior had offered up more than 77 million acres (31.2 million hectares), an area twice the size of Florida, as part of a broader effort by President Donald Trump‘s administration to ramp up US fossil fuels output.
“I think we’re seeing continued consistent investment in the Gulf of Mexico,” the Bureau of Ocean Energy Management spokesman Mike Celata said in a conference call with reporters.
He said 33 companies, including majors Royal Dutch Shell Plc and Total SA, had placed 159 bids on 148 blocks, and the results was robust.
Critics of the administration have called the unusually large lease sale ill-timed.
US crude oil and natural gas output is already smashing records thanks to improved drilling technology that has opened up cheaper onshore reservoirs, and Brazil and Mexico are competing for drilling investment in their own deepwater acreage.
“Offering a nearly unrestricted supply in a low-demand market with a cut-rate royalty and almost no competition is bad policy and an inexcusable waste of taxpayer resources,” the Center for American Progress, a left-leaning policy think-tank, said in a statement.
The United States produces about 1.5 million barrels of oil a day from the Gulf of Mexico, about 15 percent of the national total, according to the Energy Information Administration.
The US government offers Gulf of Mexico leases annually, but usually in smaller regional batches. An auction in March 2017, for example, offered up 48 million acres in the Central Gulf of Mexico planning region.
Companies bid on just one percent of that acreage, and won those tracts with bids averaging $153 an acre – 35 percent below average winning bids at a similar auction last year, and a fraction of the level paid in the region in 2013 when oil prices were much higher, according to a Reuters review of the data.