The Obama administration yesterday announced that the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) will hold the consolidated Central Gulf of Mexico Lease Sale 216/222 in New Orleans on June 20, 2012. The sale will include all available unleased areas in the Central Planning Area offshore Louisiana, Mississippi and Alabama.
President Obama highlighted his administration’s commitment to promoting safe and responsible domestic oil and gas production as part of a comprehensive energy strategy. “This is one of many steps that the Administration is taking, at the President’s direction, to increase responsible domestic production and reduce dependence on foreign oil.” reads U.S. Department of Interior’s press release.
“Expanding offshore oil and gas production is a key component of our comprehensive energy strategy to grow America’s energy economy, and will help us continue to reduce our dependence on foreign oil and create jobs here at home,” said Secretary of the Interior Ken Salazar. “The President has made it clear that developing our domestic oil and gas resources is a significant part of this administration’s efforts to grow our economy and create jobs. This lease sale is part of our commitment to safe and responsible development of the Outer Continental Shelf.”
Lease Sale 216/222 is the last remaining sale scheduled in the 2007 – 2012 Outer Continental Shelf Oil and Natural Gas Leasing Program. As the President discussed in his State of the Union address on Tuesday, DOI is finalizing the next Five-Year Program for 2012-2017, which will make more than 75 percent of undiscovered technically recoverable oil and gas estimated on the OCS available for development. The Proposed 2012-2017 Outer Continental Shelf (OCS) Oil and Gas Leasing Program schedules 12 lease sales in the Gulf of Mexico.
“The Central Gulf of Mexico remains the area with the greatest offshore oil and gas potential in the entire United States outer continental shelf, and this proposed sale is another important step in making this area available for safe and environmentally responsible exploration and development,” said Director Tommy P. Beaudreau. “We are moving forward with this sale based on careful analysis of the best scientific information available and consideration of all of the public comments we have received.”
1 BBO and 4 TCF of natural gas.
The proposed lease sale includes approximately 7,250 unleased blocks covering nearly 38 million acres. The blocks are located from three to about 230 miles offshore, in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters) in the Central Gulf of Mexico, a region that BOEM estimates contains close to 31 billion barrels of oil and 134 trillion cubic feet of natural gas that are currently undiscovered and technically recoverable. BOEM estimates that the Central Gulf sale could result in the production of 1 billion barrels of oil and 4 trillion cubic feet of natural gas.
The terms of sale will reflect recent administrative reforms to ensure fair return to taxpayers and encourage diligent development, consistent with policies articulated in the Obama administration’s Blueprint for a Secure Energy Future. These include escalating rental rates to encourage prompt exploration and development of leases, as well as time under the lease if the operator demonstrates a commitment to exploration by drilling a well during the base period. The durational terms of leases are graduated by water depth to account for differences in operating at various water depths.
In addition, BOEM recently increased the minimum bid for deepwater to $100 per acre, up from only $37.50, to ensure that taxpayers receive fair market value for offshore resources and to provide leaseholders with additional impetus to invest in leases that they are more likely to develop. Rigorous analysis of the last 15 years of lease sales in the Gulf of Mexico showed that deepwater leases that received high bids of less than $100 per acre, adjusted for energy prices at time of each sale, experienced virtually no exploration and development drilling.
The terms of sale also reflect a series of conditions to protect the environment. These include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential conflicts associated with oil and gas development in the region. BOEM completed a supplemental environmental impact statement relating to this sale, which considers the latest available information for the Central Gulf of Mexico Planning Area following the Deepwater Horizon oil spill.
Offshore Energy Today Staff, January 27, 2012; Image: DOI