U.S. sets March date for Gulf of Mexico drilling auction

A massive drilling derrick is pictured in the Gulf of Mexico, 150 miles from the Louisiana coast, May 11, 2017. Picture taken May 11, 2017. REUTERS/Jessica Resnick-Ault/File Photo

Oct 20 (Reuters) - The Biden administration on Thursday said it will hold a Gulf of Mexico drilling auction in March of next year to satisfy a requirement in the government's new climate change law.

The Bureau of Ocean Energy Management (BOEM) will offer all of the available unleased acreage in the Gulf outer continental shelf on March 29, it said in a sale notice posted online.

Sealed bids are due a day before the auction.

The sale would be the first Gulf of Mexico oil and gas auction mandated under the Inflation Reduction Act (IRA), which President Joe Biden signed into law in August. The law contains billions for climate change and clean energy initiatives but also has protections for the powerful oil and gas sector.

Biden paused drilling auctions on federal lands and waters shortly after taking office as part of a climate change agenda. But he has also faced pressure to increase oil and gas production in the face of soaring pump prices.

Senator Joe Manchin, a Democrat swing vote who represents the coal-producing state of West Virginia, demanded protections on federal leasing in exchange for his support for the IRA.

The IRA requires that BOEM now hold offshore auctions in the Gulf of Mexico and Alaska that the administration canceled earlier this year.

The agency announced last month that it will auction up to 1 million acres in the Cook Inlet off the coast of Alaska on Dec. 30. It is also in the process of finalizing a five-year proposal for offshore oil and gas development.

In a statement, environmental group Oceana urged the administration to halt offshore drilling in that plan, saying it jeopardizes the nation's climate goals and increases the risk of oil spills that threaten fishing, tourism and recreation.

An oil and gas industry group, meanwhile, praised the announcement:

"We should never have to depend upon foreign nations for energy when we have the premier, lower carbon energy region which is the Gulf of Mexico," National Ocean Industries Association President Erik Milito said in a statement.

Reporting by Nichola Groom; Editing by Josie Kao

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