Unusual Gulf drilling lease sale nets $192 million
- Ben Geman, author of Axios Generate
An oil rig in the Gulf of Mexico. Photo: Mario Tama/Getty Images
Oil-and-gas companies including giants like Exxon and Shell offered $192 million in winning bids for Gulf of Mexico drilling leases in auction results the Interior Department unveiled yesterday.
Driving the news: The sale took place under unusual circumstances. The administration didn't want to hold it at all and had previously paused new sales.
- A court challenge over the pause prevailed, although the case is ongoing.
- The Associated Press notes the sale under President Biden "laid bare the hurdles he faces to reach climate goals dependent on deep cuts in fossil fuel emissions."
The intrigue: Exxon snapped up shallow water leases, drawing speculation it intends to use them as part of the company's proposal for a regional carbon capture and storage hub.
- "I anticipate they'll use the area for direct capture of carbon and put it in the reservoirs of the blocks they acquire," Wood Mackenzie analyst Justin Rostant tells S&P Global Platts.
What's next: Interior, in announcing the auction results, said it would use updated emissions models in the future to "take substitution impacts and foreign oil consumption into account, resulting in the most robust projections ever of the climate impacts of offshore lease sales."
Go deeper: Chevron, Exxon are among top spenders at Biden offshore auction (Reuters)