Interior to test oil companies' risk appetite with drilling plan
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Trump officials took an initial step that could help answer a big question: whether oil producers will deploy capital into U.S. offshore areas beyond the Gulf of America (renamed by U.S. from Gulf of Mexico).
Why it matters: The Interior Department's offshore energy branch is launching the long bureaucratic process to create a new five-year leasing plan.
- The announcement on Friday didn't tip Interior's hand on specifics, which won't happen for a while.
- But it comes after President Trump in January revoked Biden-era bans on drilling in Atlantic, Pacific and Arctic offshore areas.
The big picture: Oil companies remain keen on the Gulf, home to almost 100% of U.S. offshore production (there's still some legacy output off California).
- But it's far less clear if there's much — if any — appetite for expensive and uncertain forays into frontier regions, especially off Alaska's coast.
- Any development decisions, even if leases are sold, would likely be many years off, when companies have a better sense of long-term demand and more.
- And Trump's efforts to yank back what President Biden envisioned as permanent withdrawals currently face court challenges from environmental groups.
What they're saying: "Launching the process to develop the 11th National Outer Continental Shelf Program marks a decisive step toward securing American Energy Dominance," Interior Secretary Doug Burgum said in a statement.
What we're watching: Interior's Bureau of Ocean Energy Management is about to open a 45-day info request, the first step in creating a new leasing program.
- It could reveal some industry thinking as officials seek stakeholder recommendations and concerns. A draft schedule would eventually follow, providing the first concrete sense of Interior's intentions.
- The current Biden-era program that runs from 2024-2029 has just three lease auctions, all in the Gulf. Development of the new plan will proceed concurrently with work on those sales.
On the much nearer-term oil and gas radar, big drilling contractors report Q1 earnings this week.
- We'll be keeping an ear out for how executives size up U.S. demand for their services amid recent price declines and tariff-related uncertainty.
What's next: Halliburton's earnings call is Tuesday, Baker Hughes follows Wednesday, and SLB's call is Friday.
