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Despite President Donald Trumpâs calls to âdrill, baby, drill,â many oil companies operating in the Gulf of Mexico will likely do what theyâve done for years: sit on hundreds of untapped oil leases across millions of acres.
Trump has repeatedly said eliminating barriers to drilling will unlock vast untapped reserves of âliquid goldâ and ignite a new era of national prosperity. But most of the drilling leases already granted to companies in the oil-rich Gulf are idle and unused, and theyâll stay that way until the United Statesâ record-breaking production rates wane and the high costs of drilling offshore drop precipitously.
Of the 2,206 active leases in the Gulf, only a fifth are producing oil, according to records from the Bureau of Ocean Energy Management, which regulates offshore drilling. Oil industry executives and analysts say the current number of 448 oil-producing leases is unlikely to grow significantly, even if Trump makes good on promises to expand leasing opportunities and expedite drilling permits.
The market is saturated with oil, making companies reluctant to spend more money drilling because the added product will likely push prices down, cutting into profits.
âItâs not the regulations that are getting in the way, itâs the economics,â said Hugh Daigle, a professor of petroleum engineering at the University of Texas in Austin. âItâs true that there are a bunch of undeveloped leases in the Gulf, and itâll stay that way if we continue to see low or stagnant oil prices.â
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Global oil production is expected to grow more than demand over the next two years, likely forcing the price of crude to drop 8 percent in 2025 and another 11 percent next year, according to a January forecast from the U.S. Energy Information Administration, or EIA.
The Gulf accounts for 97 percent of all offshore oil and gas production in the U.S. Nearly 12 million acres are under active leases in the Gulf, but only about 2.4 million acres are being used to produce oil and gas, according to BOEM data.
So, whatâs the actual benefit of a quicker and easier regulatory process for companies that donât appear to need more leases?
âItâs simple,â said Brett Hartl, the Center for Biological Diversityâs government affairs director. âThe companies make more money when they have to spend less time and effort on permits and environmental regulations and mitigation.â
A host of environmental and worker safety rules enacted after the 2010 Deepwater Horizon oil disaster has made obtaining a lease and drilling permit a multi-year process. Companies must demonstrate their operations are prepared to deal with potential blowouts and worst-case-scenario discharges, and all drilling platform designs and materials must undergo certification by independent engineers.
Itâs unclear how the Trump administration will change these and other offshore drilling rules. During Trumpâs first term, his administration loosened requirements for offshore well designs, materials, and monitoring technology. Former President Joe Biden reinstated most of these rules.
Oil companies cheered Trumpâs recent calls for a more streamlined process and a series of energy-related executive orders he signed this month. The orders declared an âenergy emergency,â expanded drilling in the Arctic and repealed Bidenâs ban on drilling off the East and West coasts and parts of Alaska.
âDirecting regulators to expand access to resources [and] streamline permitting processes ⊠will help deliver a stronger, more prosperous energy future for all Americans,â Mike Sommers, president of the American Petroleum Institute, said in a statement last week. âThis is a new day for American energy, and we applaud President Trump for moving swiftly to chart a new path where U.S. oil and natural gas are embraced, not restricted.â
But industry leaders have also been clear that these and other policy changes floated by Trump wonât lead to more drilling. The U.S. is already producing more crude oil than any country, ever, according to the EIA. Last yearâs production rate of 13 million barrels per day was a new record high, surpassing the previous record set in 2023.
âI donât think today that production in the U.S. is constrained,â ExxonMobil CEO Darren Woods told Semafor in November. âSo, I donât know that thereâs an opportunity to unleash a lot of production in the near term, because most operators in the U.S. are [already] optimizing their production today.â
In essence, oil is just too cheap to justify more drilling. If prices do go up, companies are likely to tap into Permian Basin shale in Texas and New Mexico rather than seek offshore reserves, which cost more to drill, according to industry analysts.
But that doesnât mean companies wonât snap up even more offshore leases if theyâre offered, Daigle said.
âSome of these (leases) might be drilled in the future, but many are being held just so somebody else doesnât lease them,â he said. Companies may also stockpile leases to raise funds from investors, or they may simply be playing âmind gamesâ with competitors. Buying up leases in one area of the Gulf can sometimes throw rival drillers off the scent of richer deposits elsewhere, Daigle said.
Leases have been sold too quickly and cheaply in recent decades, according to a 2021 report by the U.S. Department of the Interior, which oversees BOEM. This fast and loose approach âshortchanges taxpayersâ and encourages âspeculators to purchase leases with the intent of waiting for increases in resource prices, adding assets to their balance sheets, or even reselling leases at profit rather than attempting to produce oil or gas,â the report said.
âMore leases may make the companies look good, on paper, to investors,â said Tom Pelton, communications director for the Environmental Integrity Project, an environmental watchdog group. âBut they wonât necessarily even produce more oil and gas. And they certainly will not be good for the climate or clean water.â
If Trump really wanted to slash energy prices for U.S. consumers, he wouldnât have banned offshore wind leasing in federal waters or restarted permitting for new liquefied natural gas (LNG) export terminals, said Scott Eustis, the community science director for Healthy Gulf, a nonprofit environmental group.
Shipping LNG overseas contributes to higher electricity and natural gas prices in the U.S., according to a recent U.S. Department of Energy report.
âLNG exports make everybodyâs energy cost more because weâre giving it to China and not using it domestically,â Eustis said.
Beyond the economics, giving companies an easier route to secure leases and permits does little more than put the Gulf at risk of another Deepwater Horizon-scale disaster, Hartl said.
âThe only result weâll have is more risky drilling,â he said. âAnd then the question is not âifâ but âwhenâ weâll have the next catastrophic spill in the Gulf.â
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