Interior Department Plans Largest Offshore Lease Sale in History

Published December 13, 2017

U.S. Secretary of the Interior Ryan Zinke has announced the Department of Interior (DOI) will offer the largest oil and gas lease sale in U.S. history on March 21, 2018.

The auction will sell leases on approximately 76.97 million acres of federal waters, mainly offshore Alabama, Louisiana, Mississippi, and Texas.

DOI’s Bureau of Ocean Energy Management estimates the U.S. Outer Continental Shelf (OCS) contains approximately 90 billion barrels of undiscovered technically recoverable oil and 327 trillion cubic feet of undiscovered technically recoverable gas, with the Gulf of Mexico portion of the OCS containing more than 48 billion barrels of technically recoverable oil and 141 trillion cubic feet of gas.

Income from oil and gas leases and royalties on federal lands and the OCS is the second largest source of revenue for the federal government, behind the federal income tax. The Gulf states and Alaska also benefit directly from OCS lease sales. In addition to jobs created within their borders, Alabama, Louisiana, Mississippi, and Texas share 37.5 percent of Gulf offshore oil and gas revenues, under the 2006 Gulf of Mexico Energy Security Act (GOMESA). Those same four states and Alaska also receive a share of revenue from oil and gas output under the 1953 Outer Continental Shelf Lands Act.

Unique Sale

The March sale is the first of its kind. Previous presidential administrations have offered a few blocks or areas within one of the two Gulf regions which allow oil and gas exploration and production, during two separate sales. President Donald Trump is breaking with tradition in pursuit of his stated goal of U.S. energy dominance, offering the entirety of both available regions for lease during one auction.

The March auction will offer for lease 14,375 blocks, located three to 230 miles offshore in the Gulf’s Central and Western planning areas, an area the size of New Mexico. The Eastern Gulf planning area will remain off limits because development in that area is restricted by various laws.

Pressing for Energy Dominance

The press release from DOI announcing the expanded sale included comments from members of Congress and governors of Gulf states. The release quotes Zinke as saying the lease auction is one more step DOI is taking to promote the president’s efforts to bring about U.S. energy dominance.

“In today’s low-price energy environment, providing the offshore industry access to the maximum amount of opportunities possible is part of our strategy to spur local and regional economic dynamism and job creation and a pillar of President Trump’s plan to make the United States energy-dominant,” Secretary Zinke said.

Sen. Roger Wicker (R-MS), Alabama Gov. Kay Ivey, and House Majority Whip Steve Scalise (R-LA) contributed comments to DOI’s press release, saying Trump’s decision to make all leasable OCS areas available in a single sale will benefit workers and the nation.

“President Trump’s team is following through on their commitment to advancing America’s energy independence,” said Wicker in the joint statement. “Unlike the previous administration, this one understands that expanded offshore energy development benefits working families, consumers, and our national security.” 

 “President Donald Trump made clear his desire to ensure Americans can use our own natural resources to produce the energy vital to our economy and national security,” said Ivey. “As he has done time and again, President Trump has proven to the people of Alabama that he is a man of his word, and we are grateful to him and to Secretary Ryan Zinke for their determination to open a vast tract of American waters to oil and gas exploration.”

“President Trump has stated that he wants our country to exert ‘energy dominance’ throughout the world, and this lease sale is another bold step in that direction,” said Scalise. “My constituents in southeast Louisiana will be leading the way in this exploration and development that will create good jobs and kickstart more economic growth.” 

Responding to Public Demand

In the press release, DOI Counselor for Energy Policy Vincent DeVito said the lease sale is part of President Trump’s response to Americans’ demands for more jobs and greater energy security.

“People need jobs, the Gulf Coast states need revenue, and Americans do not want to be dependent on foreign oil,” said DeVito. “We have heard their message loud and clear.”

Nick Loris, research manager of the Heritage Foundation’s Institute for Economic Freedom, says the lease sale marks a positive reversal of course necessary for energy dominance.

“It’s encouraging to see the current Interior Department finally reversing bad policy,” said Loris. “America’s energy abundance has been walled off by regulatory red tape which hampers economic growth in parts of the country where energy production is off limits.

“Unlocking these reserves will take America from the energy powerhouse it already is to solidifying President Trump’s goal of energy dominance, while creating jobs and lower energy prices to boot,” Loris said.

Importance of Energy Abundance

Gary L. Stone, vice president of engineering at Five States Energy, says the lease sale shows the Trump administration recognizes the importance of energy abundance to industry and homeowners.

“The Interior Department’s announcement of the largest offshore lease sale in history is further evidence the Trump administration will encourage the production of fossil fuels, in contrast to the oppressive regulations and cancelled sales from the Obama administration,” Stone said. “The Trump administration seems to recognize the tremendous advantage a strong domestic energy industry gives to U.S. industry, homeowners, and to our international trade balance.”

H. Sterling Burnett, Ph.D. ([email protected]) is a research fellow at The Heartland Institute.

Official Connections:

Sen. Roger Wicker (R-MS):;

Rep. Steve Scalise (R-LA):;