Washington — The US will hold its next auction for oil and natural gas drilling rights in federal Gulf of Mexico waters March 18, the Bureau of Ocean Energy Management said Monday.

Lease Sale 254 will offer 78 million acres and 14,585 blocks, or nearly all available Gulf of Mexico waters not currently facing a drilling prohibition, such as much of the eastern Gulf, which remains under a congressional moratorium.

US Gulf of Mexico production is forecast to average 1.81 million b/d this month, up from 1.75 million b/d in October 2018, according to the US Energy Information Administration. US Gulf output is forecast to climb to 2.11 million b/d by December 2020, according to EIA.

March's planned sale would follow the previous lease sale in August, which generated $159 million in high bids -- 35% less than the previous sale earlier this year, but enough to make combined 2019 sale totals the highest since 2015.

Environmental groups have challenged the leases awarded in four previous Gulf of Mexico sales, arguing that BOEM violated the National Environmental Policy Act in its environmental review for its upcoming lease sale. BOEM ignored the impact of the Trump administration's efforts to revise and weaken offshore safety rules developed during the Obama administration, the complaint alleges, according to a complaint Earthjustice filed with the US District Court for the District of Columbia in August.

The complaint also alleges that BOEM ignored the impact of its 2017 change, which lowered federal royalty rates on shallow water leases from 18.75% to 12.5% to spur new interest in drilling in those waters.

Interest in shallow-water oil and gas drilling rights may have peaked more than five years ago, despite efforts by the Trump administration to encourage production closer to the Gulf Coast, according to a recent S&P Global Platts analysis of offshore lease sale results over the past decade.

Since the March 2014 lease sale in New Orleans, shallow-water bids have accounted for an often far lower percentage of the total bids offered in a given offshore auction, while dollar amounts offered for shallow-water leases have fallen dramatically, according to the analysis.

Interior's current offshore lease sale plan, which runs through 2022, calls for two Gulf sales in 2020, two in 2021, one in 2022 and a 2021 Cook Inlet sale.

Interior had planned to scrap the current lease sale plan and replace it with a plan that included sales in nearly all federal waters, including Atlantic and Arctic waters. A court decision which affirmed an Obama administration decision protecting much of those Arctic waters from oil and gas drilling caused Interior officials to put plans for an expanded lease sale schedule on hold.

-- Brian Scheid, brian.scheid@spglobal.com

-- Edited by Valarie Jackson, newsdesk@spglobal.com