Despite President Donald Trump’s calls to “drill, baby, drill,” many oil companies operating in the Gulf of Mexico will likely do what they’ve 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 “liquid gold” 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 they’ll stay that way until the United States’ 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.
“I don’t think today that production in the US is constrained,” ExxonMobil CEO Darren Woods said in November. “So, I don’t know that there’s an opportunity to unleash a lot of production.”
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. “It’s not the regulations that are getting in the way, it’s the economics,” said Hugh Daigle, a professor of petroleum engineering at the University of Texas in Austin. “It’s true that there are a bunch of undeveloped leases in the Gulf, and it’ll stay that way if we continue to see low or stagnant oil prices.”
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