Interior Sets Date for Largest Offshore Lease Sale
The question is how much demand from bidders there will be at the March 21 sale, given that U.S. oil and gas production is so high.
March 21 is the date on which the Interior Department will conduct the largest lease sale ever for oil and gas exploration in federal waters of the Gulf of Mexico: 77.3 million acres off the coasts of Texas, Louisiana, Mississippi, Alabama, and Florida. Deputy Secretary of the Interior David Bernhardt announced it last week, saying it will include all available unleased areas in federal waters of the gulf.
The question is how much demand from bidders there will be, given that U.S. oil and gas production is so high. U.S. crude production rose to a record 10.2 million barrels per day in January 2018, according to API, which said the new high was up 1.1 percent from December 2017 and 15.1 percent from January 2017. API's Feb. 16 report said natural gas liquids production "sustained near-record output in January at 4.0 MBD, which was an increase of 18.4 percent versus January 2017," and that EIA's Short-Term Energy Outlook, released Feb. 6, 2018, showed U.S. dry natural gas production averaged 77.6 billion cubic feet per day during January, which was up 9.9 percent from January 2017.
"In Olympic fashion, U.S. crude oil production scored a perfect '10' in January," API Chief Economist Dean Foreman said. "Record production of 10.2 MBD combined with a new high for refinery throughput, plus 6.3 MBD of crude oil and refined product exports, helped to narrow the price difference between U.S. and international crude prices last month, which reinforced the increasingly pivotal role of U.S. energy."
API's report said U.S. petroleum demand, as measured by total domestic petroleum deliveries, rose to 20.3 million barrels a day in January 2018, up 5.5 percent over demand in January 2017 and the strongest January monthly demand since 2007.
Offshore leased last year raised $1 billion more in revenue for DOI than was made off energy revenues in 2016. "Responsibly developing our offshore energy resources is a major pillar of President Trump's American Energy Dominance strategy," Bernhardt said. "A strong offshore energy program supports tens of thousands good-paying jobs and provides the affordable and reliable energy we need to heat homes, fuel our cars, and power our economy. We have the strongest safety regulations in the world, and today's technology is making the responsible development of our resources even safer. We look forward to this important sale and continuing to raise energy revenues, which fund efforts to help safeguard our natural areas, water resources, and cultural heritage, and to provide recreation opportunities to all Americans."
The March 21 sale is scheduled to be live-streamed from New Orleans and will be the second offshore sale under the National Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022.