Offshore activity on the US Gulf Coast continued to outperform much of the US land sector in 2024 in terms of return on investment, due particularly to deepwater projects, and it was hoped that this would carry over into 2025. This was not the case. Wells drilled during the second half of the year versus the first half were expected to be down by 2.5%, at 39, while wells drilled for the year as a whole were forecast to decline by a whopping 25%, to just 79, compared with 2024.
Indeed, figures from the Baker Hughes Rig Count show Gulf drilling plummeted 36.9%, falling from 16.8 active rigs in 2024 to just 10.6 units in 2025 over 11 months. Drilling offshore Louisiana dropped from 14.5 rigs in 2024 to 9.3 in 2025. And activity offshore Texas slipped from 2.3 rigs in 2024 to just 1.3 in 2025.
Drilling was down in the Gulf in late 2025 due to a combination of high costs, supply chain issues and low oil prices—all of which make new projects less profitable. The situation has not been helped by a shrinking pool of active operators and a strategic shift of activity by some oil companies to lower-cost onshore or international projects. That having been said, several companies anticipate a rebound in 2026, as some projects years in the making come online and charter contracts for drillships are fulfilled.
Fully revamped offshore leasing
Among the policy initiatives that the Trump administration has promised to make good on since taking office has been to rejuvenate offshore oil and gas leasing. Indeed, various comments were heard from the US Department of the Interior (DOI) over the last 6–8 months that a complete overhaul of federal offshore leasing was coming soon—with a new, draft five-year plan.
The wait is now over. On 20 November 2025, the DOI announced the new offshore strategy, which is considerably larger than the previous version. A secretary’s order composed by DOI directs its subsidiary, the Bureau of Ocean Energy Management, to take the required actions to terminate the 2024–29 National Outer Continental Shelf Oil and Gas Leasing Program that the Biden administration put into effect during December 2023. It will be replaced with a new, larger 11th National Outer Continental Shelf Oil and Gas Leasing Program by October 2026.
These actions symbolise the Trump administration’s interest in restoring the US’ offshore upstream activity to a level reminiscent of that seen 5–15 years ago. It replaces perhaps the smallest offshore leasing plan ever devised by an administration (Biden’s, with just three lease sales planned) with one that contains the largest number of proposed leasing rounds ever (Trump’s second, with a record 34 lease sales planned).
Under the new proposal for the 2026–31 National Outer Continental Shelf Oil and Gas Leasing Program, the emphasis is on the DOI building US offshore production to help boost energy independence. The proposed plan would offer the 34 potential lease sales across 21 of 27 existing OCS planning areas, covering approximately 1.27b acres. That includes 21 sales off the coast of Alaska, seven sales in the US Gulf and six along the Pacific coast (see Fig. 1). Also included is a controversial move by Interior Secretary Doug Burgum to create a new administrative planning area, the South-Central Gulf. It is close enough to Florida’s Gulf coast that it is sure to receive pushback from elected officials in both parties from that state.
“Offshore oil and gas production does not happen overnight. It takes years of planning, investment and hard work before barrels reach the market,” said Burgum in a DOI release. “The Biden administration slammed the brakes on offshore oil and gas leasing and crippled the long-term pipeline of America’s offshore production. By moving forward with the development of a robust, forward-thinking leasing plan, we are ensuring that America’s offshore industry stays strong, our workers stay employed and our nation remains energy dominant for decades to come.”
Reaction from the industry has been enthusiastic. API President and CEO Mike Sommers called the proposal “a historic step towards unleashing our nation’s vast offshore resources”, praising DOI leadership for restarting a predictable leasing process after years of delay. National Ocean Industries Association President Erik Milito said the region—now formally designated ‘GOA Program Area A’—remains “the gold standard for offshore energy”. And Independent Petroleum Association of America President and CEO Edith Naegele said a robust five-year schedule is “essential to national security needs”, noting that including all OCS regions in early drafts enables competitive bidding and maximises returns to the US Treasury.
The DOI’s new plan is well thought out and gutsy. It takes some bold steps towards rebuilding US offshore activity. Somewhat noteworthy is that the DOI plan includes a lease sale in 2030 for the ‘High Arctic’ area offshore Alaska’s north coast. Given the continued E&P activity in the Arctic by Russia and Norway, this is an important—and needed—move.
Projects
Among some of the highlights in the last 12 months, production began from Shell’s Whale deepwater platform at the start of the year in 8,600ft of water. Peak production from that facility should be roughly 100,000b/d. In addition, Shell and Chevron both started production from deepwater subsea tiebacks in April at Dover and Ballymore fields, respectively. Shell has tied the new wells back to its existing Appomattox production hub. Output is about 20,000b/d. Ballymore is expected to produce up to 75,000b/d gross through three wells tied back three miles to the existing Chevron-operated Blind Faith facility.
In June, TotalEnergies acquired a 25% working interest in 40 Chevron-operated exploration leases. The 40 tracts span roughly 1,000km² and are located 175–330km from shore. Beacon Offshore also began production from Shenandoah field in the deepwater Gulf in late July, with Phase 1 ramping up to about 100,000b/d, late in the year.
The Argos Southwest Extension, a three-well tie-back to the existing Argos platform, is operated by BP. It achieved first oil during August 2025 and is expected to add 20,000b/d of peak production. BP is also moving forward with the Kaskida project, its sixth platform in the Gulf. This is the company’s step towards unlocking vast Paleogene resources. The Kaskida platform should have a production capacity of 80,000b/d, with an anticipated startup in 2029.
Oil production from the Gulf
Finally, according to consultancy Wood Mackenzie, producers in the Gulf have been bringing on 300,000b/d of new oil output in 2025. They expect another 250,000b/d to be added in 2026. One needs to keep in mind that these gains are due to projects many years in the making. However, when natural production declines are subtracted from the Gulf’s total monthly production, the net gain from 2024’s level to 2025’s figure is about 140,000b/d, according to the US Energy Information Administration, which said that, as of August, the 2025 oil production rate was 1.979m b/d.
Kurt Abraham is editor-in-chief of World Oil. This article is taken from our Outlook 2026 report. To read Outlook 2026 in full, click here.
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