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Interior’s August GOM Auction to Offer 14,622 Shallow, Deepwater Blocks

Nearly 78 million acres are on offer for oil and natural gas development offshore Texas, Louisiana, Mississippi, Alabama and Florida in a federal auction to be held in August, the Department of Interior said Friday.

Region-wide Lease Sale 251, scheduled to be livestreamed on Aug. 15 from New Orleans, is to include all available unleased areas in federal waters of the Gulf of Mexico (GOM).

The GOM “continues to be the crown jewel” of the Outer Continental Shelf (OCS), said Deputy Interior Secretary David Bernhardt.

Lease Sale 251 is to include about 14,622 unleased blocks that are 3-231 miles offshore, in water depths of nine feet to more than 11,115 feet (3-3,400 meters). The GOM’s OCS, covering about 160 million acres, contains an estimated 141 Tcf of natural gas and 48 billion bbl of oil still undiscovered but technically recoverable.

The sale would be the third under the National OCS Oil and Gas Leasing Program for 2017-2022. Interior’s Bureau of Ocean Energy Management (BOEM) is livestreaming the auction from New Orleans.

BOEM is planning to conduct 10 region-wide GOM lease sales in the program to 2022, or two every year. Each sale is to be region wide and include all available blocks in the combined Western, Central, and Eastern GOM Planning Areas.

The Trump administration’s decision to hold region-wide GOM sales, instead of focusing on one planning area, to date has not been met with much industry enthusiasm. The slowdown in offshore leasing is attributed in part to the higher costs to work in the offshore, as well as the myriad, less expensive opportunities that abound in North America’s onshore basins.

For example, an auction held in March, which Interior Secretary Ryan Zinke had said would be a “bellwether” about future offshore exploration, barely managed to surpass results from one a year earlier, even though the sale included every available unleased block in the GOM, with some offered at a lower royalty rate.

To encourage more shallow water exploration, BOEM charges a 12.5% royalty rate for leases taken in waters less than 200 meters deep. For leases in deeper water depths, the royalty rate is 18.75%.

“Powering America and protecting the offshore environment are not mutually exclusive,” said Interior’s Vincent DeVito, counselor for energy policy. “We can do both. American energy production can be competitive, while remaining safe and environmentally sound.”

The final notice of sale (FNOS) information package was published Friday and is scheduled to be published in the Federal Register on Monday. Copies of the FNOS maps are available from the GOM Region’s Public Information Unit, 1201 Elmwood Park Blvd., New Orleans, LA 70123, or at 800-200-4853.

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