(The Center Square) - The second auction of oil and gas leases in the Gulf of America since President Donald Trump’s election in 2024 drew almost $47 million in high bids, with 98% of the activity in offshore areas deeper than 800 meters, according to sales results released by the Bureau of Offshore Energy Management.

The Big Beautiful Gulf 2 auction in New Orleans on Wednesday drew 38 bids from 13 companies on 25 blocks covering about 141,000 acres in federal waters off the coasts of Texas, Louisiana and Mississippi, according to the agency.

“Lease Sale BBG2 represents a significant advancement in BOEM’s offshore oil and gas program in the Gulf of America,” said Matt Giacona, the agency’s acting director. “Following the substantial industry interest in Lease Sale BBG1, this proposed sale is intended to sustain investment in the U.S. Outer Continental Shelf and bolster American energy independence,” Giacona said.

In December, Big Beautiful Gulf 1, the first auction of Gulf of America acreage since December 2023, generated approximately $300 million in high bids from 30 companies on 181 blocks covering 1.004 million acres in federal waters.

In the 2025 fiscal year, the 677.2 million barrels of oil produced on the U.S. Outer Continental Shelf represented 14% of all domestic output. During his 2026 State of the Union address, Trump pointed to record-breaking domestic oil and gas production as a fulfillment of his promise to prioritize American energy independence.

Government taxes, bonuses and fees generated in offshore federal waters totaled about $5.8 billion in the 2025 fiscal year, according to the U.S. Department of the Interior.

Revenues from offshore energy activities provide funding for the U.S. Treasury, Gulf Coast states, the Land and Water Conservation Fund and the Historic Preservation Fund.

The Gulf of Mexico Energy Security Act of 2008 specifies that revenue generated at auctions of offshore acreage is shared among four coastal states: Louisiana, Texas, Mississippi and Alabama. The distribution of the funds is determined by a formula based on the state’s distance to the offshore lease sites, with Louisiana receiving the largest share, Texas second, followed by Mississippi and Alabama. 

By law, these states must use the revenue to mitigate the impacts of offshore energy production, including coastal restoration and protection, hurricane protection, onshore infrastructure such as sewer and water systems directly affected by coastal wetland loss, mitigation of environmental damages and resilience planning.

In the 2025 fiscal year, about $156 million, or 44%, of the revenues from offshore royalties, fees and bonuses went to Louisiana, while Texas received $96 million, or 27%. Mississippi and Alabama received funding totaling $52 million and $50 million, respectively, in the last fiscal year.

Under the One Big Beautiful Bill Act signed by Trump in July 2025, the annual revenue-sharing cap for the four Gulf Coast states will rise from $500 million to $650 million beginning in the 2025 fiscal year and continuing through 2034. The Gulf states will now receive 75% of revenues generated in offshore oil and gas production or up to $487.5 million annually.Several environmental advocacy groups, including the Sierra Club, expressed opposition to the second auction. “The Trump administration is ignoring the law to allow oil and gas companies to pollute our public waters and pad their bottom lines," said Athan Manuel, director of Sierra Club's Lands Protection Program.

"Offshore drilling is one of the riskiest, dirtiest, and most hazardous kinds of oil extraction, incompatible with coastal economies or ecosystems,” Manuel said in a statement. The most active companies in the auction included Shell, Chevron and BP, whose winning bid of $21.9 million for Block 404 in Green Canyon off the Louisiana coast accounted for 45% of all revenue generated in the lease sale. Other companies submitting winning bids include independent operators LLOG, Talos Energy, Beacon Offshore Energy, Houston Energy and Arena Energy.Approximately 98% of the winning bids on Tuesday occurred in deepwater areas on blocks at depths of 800 meters or more.Several independent and industry-led studies support the claim that U.S. Gulf oil production in deepwater areas has a lower carbon footprint per barrel than shale or other drilling technologies. This advantage is primarily attributed to the high productivity of individual deepwater wells, which spreads the emissions from construction and operations over higher levels of production than onshore shale or older conventional oil fields.