Supermajors Pile Into Low-Carbon Gulf of Mexico Acreage
Offshore Gulf of Mexico is becoming the destination of choice for international oil companies seeking new, low-carbon acreage to explore and develop.
Offshore Gulf of Mexico is becoming the destination of choice for international oil companies seeking new, low-carbon acreage to explore and develop. Lease Sale 257 on 17 November garnered $192 million in winning bids, about double the average of the previous seven auctions, across 170 deepwater and 140 shallow-water blocks. The sale went ahead after a court blocked the Biden administration’s lease moratorium imposed early this year. The moratorium was to allow the U.S. Department of the Interior to review the environmental impacts associated with oil and gas activities on public lands and in offshore waters.
Unsurprisingly, the sale drew criticism from environmentalists despite the basin offering the lowest Scope 1 greenhouse gas emissions intensity in the U.S. at 8 kg CO2e/BOE. The GOM’s Scope 1 emissions are even competitive on a global scale. The Oil and Gas Climate Initiative, whose members include the so-called supermajors responsible for 30% of total world oil production, has a 2025 emissions target of 17 kg CO2e/BOE from its members’ operated upstream assets, more than double the Gulf of Mexico average.
We mostly attribute the low emissions profile to a well-developed gas offtake infrastructure and market that reduces the need for flaring. In addition, the Gulf of Mexico has strict environmental, social, and governance regulations; relatively young infrastructure; and significant discovered but undeveloped hydrocarbon resources. The continued investment by supermajors confirms the basin’s global top-tier status despite their commitment to reduce oil production and emissions.