US oil and gas companies are competing for the first exploration round in the Gulf of Mexico since 2021

US oil and gas companies are preparing to compete for contracts for the first exploration round in the Gulf of Mexico to be approved by President Joe Biden, after the tours stopped since 2021.

The US Department of the Interior has completed the necessary arrangements for holding the new auction to purchase exploration rights in the Gulf of Mexico, during the month of March 2023, according to the Argos Media website, which specializes in analyzing energy markets.

The volume of US oil production from the Gulf of Mexico amounted to nearly 1.7 million barrels per day, during the past year, according to the specialized energy platform.

Production is expected to rise to a record level of 1.9 million barrels or more per day in 2023, according to estimates from the US Energy Information Administration.

300 thousand km for rent

This auction is the first opportunity for US oil and gas companies since 2021, when US President Joe Biden decided to halt federal land and water leases for new projects in the country.

The new auction, No. 259, is scheduled to take place on March 29, 2023, according to a statement posted on the US Department of the Interior website.

The areas offered for lease to US oil and gas companies in the upcoming auction are approximately 73.3 million acres (300,000 km).

US oil and gas companies have put enormous pressure on US President Joe Biden’s administration to resume regular and continuous leasing of federal lands and waters for the country’s vital fossil fuel projects.

Another round in September

A new round of marine leases is expected by September 30, 2023, in accordance with the requirements of the Inflation Control Act that Biden passed in August 2022.

The requirements of the law include preventing the conclusion of additional lease contracts, until the administration finishes the five-year marine leasing plan for the period from 2023 to 2028.

Last summer, the Department of the Interior proposed resuming leases twice a year in the Gulf of Mexico, with the option to sell for lease removed.

The ministry’s proposal was widely criticized by oil and gas producers, amid accusations that the US administration was blocking the leasing plan until 2028, through backdoors.

Lawsuit against Biden

Oil and gas companies filed a lawsuit, during January 2023, asking the federal court to oblige the Biden administration to end the five-year lease plan no later than September 30, 2023.

The companies called on the Biden administration to reject the rent-free sale option, and warned against obstructing the leasing plan with new restrictions that will have negative repercussions on local communities dependent on marine production.

In 2021, President Joe Biden halted new leases for oil and gas projects, as part of climate plans and tougher environmental requirements for fossil fuel companies.

This decision faced widespread objections from Republican representatives in the US Congress, in addition to 10 US states that challenged the decision before the national courts.

Republican opposition

A lower court in Louisiana ruled in favor of the objecting states in June 2021, but an appeals court overturned the ruling on August 17, 2022.

In April 2021, the Biden administration was forced to back down a bit and resume lease contracts in 4 US states. What prompted 10 environmental organizations in solidarity to file a lawsuit in the opposite direction against Biden.

Republicans are exerting great pressure on the president to resume the leasing plan without restrictions or bureaucratic obstacles that impede the growth of the oil and gas sector at a sensitive time and global turmoil that cannot be delayed.

American Petroleum Institute vice president Frank Macchiarola warned of volatility in domestic and global energy markets if the administration continues to block new lease plans for federal lands and waters.

Bill proposed against Biden

Republicans are considering trapping President Biden in decisions to withdraw from the country’s strategic oil reserves through a legislative proposal that has been circulating in Congress since mid-January 2023, according to The Hill.

In March 2022, Joe Biden announced a plan to withdraw the largest amount of US strategic oil stocks to mitigate the effects of the Ukrainian war on the domestic market and gasoline and diesel prices.

The Republicans propose obligating the president and the Secretary of Energy to prepare an alternative plan to increase local production projects in the event of withdrawal from the stock in non-emergency circumstances, with the aim of maintaining stock compensation on an ongoing basis.

The legal proposal has not been submitted to a vote in the plenary session of Congress yet, but a majority of Republicans may help pass it, but it may be obstructed in the House of Representatives, which is controlled by the president’s party.

This is not the first restriction Republicans have in mind. They had previously proposed a bill to ban the sale of strategic oil stocks to China at all.

The proposal won the vote of a majority of members of the US Congress in the January 12, 2023 session, but it has not yet passed the House of Representatives, according to what was monitored by the specialized energy platform.

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