Gulf of Mexico oil and gas auction set for March 29

Feb. 24 (UPI) -- More than 73 million acres of U.S. territorial waters of the Gulf of Mexico will open for drilling auctions in March, in line with federal mandates, the government announced Friday.

The Bureau of Ocean Energy Management, part of the Interior Department, said approximately 13,600 blocks of maritime territory spread out over 73.3 million acres in the Gulf of Mexico will go on the auction block on March 29.

The bipartisan Inflation Reduction Act requires the BOEM to hold a lease no later than March 31.

President Joe Biden had been reluctant to open up new offshore acreage, issuing a moratorium on new drilling in one of his first acts of office. That was met with outrage by the industry and the matter was eventually included as a provision to IRA by Sen. Joe Manchin, a Democrat from West Virginia who is decidedly pro-fossil fuels.

Manchin this week was joined by U.S. Sen. Lisa Murkowski, R-Alaska, in introducing legislation calling on the administration to support even more exploration and production at home, ostensibly to support U.S. allies struggling to find alternatives to Russian oil and natural gas.

The latest federal data show the Gulf of Mexico produces around 1.7 million barrels of oil per day, compared with about 12 million bpd for the entire country. Total gas production accounts for about 15% of the national total.

While paling in comparison to the oil and gas found in the inland shale basins, energy companies are still keen on tapping new reserves offshore.

Shell and its Norwegian counterpart Equinor started production last week at the Vito floating production facility in the Gulf of Mexico. Shell estimated peak production would be around 100,000 barrels of oil equivalent per day.

Equinor added the platform itself was reconfigured so that costs would be 70% lower than initially expected and emissions would be 80% lower over its expected lifetime.

Equinor considers the Gulf of Mexico one of its "core areas" of growth in the country. With a combined 120,000 barrels of oil equivalent production from its collective assets, Equinor is one of the top five producers in the region.