On Wednesday, the Bureau of Ocean Energy Management (BOEM) announced that it will hold an auction for about 80.4 million acres of federal waters in the Gulf of America this August. This sale is part of the third phase of the offshore oil and gas leasing initiative started by the Trump administration to speed up energy development.
The upcoming auction, called Lease Sale Big Beautiful Gulf 3 (BBG3), will include about 15,066 unleased blocks located 3 to 231 miles offshore, with water depths ranging from 9 feet to over 11,100 feet. This announcement follows two earlier sales this year as part of the One Big Beautiful Bill Act, which plans for 30 lease sales in the Gulf and six in Alaska's Cook Inlet over the next several decades.
“Lease Sale BBG3 represents another important step for the Gulf of America,” said BOEM Acting Director Matt Giacona. “With the success of BBG1 and BBG2 behind us, this proposed sale shows BOEM’s ongoing commitment to regular offshore leasing as required by the One Big Beautiful Bill Act. By offering leases at a competitive 12.5% royalty rate, BBG3 indicates that the time of regulatory uncertainty is past, and a new era of responsible energy leadership is underway.”
The Outer Continental Shelf of the Gulf of America covers roughly 160 million acres and is believed to hold 29.59 billion barrels of undiscovered, technically recoverable oil and 54.84 trillion cubic feet of natural gas. In fiscal year 2024, this area generated $6.5 billion in federal royalties, along with $372.5 million in bonus bids and $122.8 million in rental revenue.
The schedule for this sale marks a significant increase in the pace of offshore leasing compared to previous programs. Giacona previously referred to the second sale, BBG2, as “a key step in advancing BOEM’s offshore oil and gas program in the Gulf of America,” noting sustained interest from the industry after the first sale, BBG1.
However, recent auction outcomes indicate that the market might be slowing down. The initial BBG1 sale brought in $279.4 million from high bids on 181 blocks, with 30 companies making 219 bids totaling $371.9 million. Although major companies like BP, Chevron, and Shell were involved, the results were lower than the December 2023 Gulf lease sale, which had 352 bids amounting to $441.9 million across 311 tracts.
The weaker bidding trend coincided with falling oil prices, as WTI was trading at around $58.50 during the BBG1 sale—much lower than prices seen at the end of 2023. To encourage participation, BOEM set the royalty rates at 12.5% for both shallow and deepwater leases, which is the lowest deepwater rate since 2007.
Certain areas will not be included in the BBG3 auction, such as blocks affected by the presidential withdrawal on September 8, 2020; blocks next to or beyond the U.S. Exclusive Economic Zone in the Eastern Gap; and those within the boundaries of the Flower Garden Banks National Marine Sanctuary.
A Proposed Notice of Sale will be published in the Federal Register on February 20, starting a 60-day comment period for affected state governors and local governments. After considering the governors' feedback, BOEM will issue a final notice of sale at least 30 days before the planned auction date.
This sale supports Executive Order 14154, “Unleashing American Energy,” which directs federal agencies to speed up offshore energy development. Interior Secretary Doug Burgum has noted that early results from lease sales demonstrate the administration's energy strategy is making progress, highlighting job creation, investment, and energy security as key goals.