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Interior Schedules First Lease Sale for 2012-17 Plan

As part of the Obama administration's "all-of-the-above energy strategy," Interior Secretary Ken Salazar last week said the agency will offer more than 20 million acres offshore Texas for oil and natural gas exploration and development in a year-end lease sale that will include all of the available unleased areas in the Western Gulf of Mexico (GOM) Planning Area.

The proposed Western GOM Lease Sale 229, which is scheduled to take place in New Orleans on Nov. 28, will be the first sale under the administration's new Outer Continental Shelf (OCS) leasing plan for 2012-2017.

The administration's final leasing program, which was released in June, proposes 15 leases sales in six offshore areas. Twelve of the potential lease sales would be held in the Western and Central GOM and the portion of the Eastern GOM not currently under a congressional moratorium, with the remainder to be potentially held offshore Alaska (see NGI,July 2).

The House of Representatives last Wednesday rejected President Obama's leasing plan, and instead passed a Republican plan that would nearly double the number of sales to be held during the five-year period (see related story). The administration's leasing plan has come under attack from industry because it does not include lease sales off the Atlantic or Pacific coasts.

The Western GOM sale will include approximately 3,800 blocks covering roughly 20.5 million acres located from nine to 250 miles offshore in water depths ranging from 16 to more than 10,975 feet (five to 3,346 meters). Interior's Bureau of Ocean Energy Management estimates the proposed Lease Sale 229 could result in production of 116-200 million bbl of oil and 538-938 Bcf of natural gas.

The terms of the lease sale include a range of incentives to encourage diligent development and ensure a fair return to taxpayers, including an increased minimum bid for deepwater tracts, escalating rental rates and tiered durational terms with relatively short base periods followed by additional time under the same lease if the operator drills a well during the initial period.

The Interior announcement follows the June lease sale in the Central GOM, which drew 56 operators bidding a total of $1.705 billion-plus to prospect 454 tracts offshore Louisiana, Mississippi and Alabama (see NGI, June 25). It was the first Central GOM lease sale since the Macondo well blowout in April 2010 and was the fourth-largest ever for the Central GOM.

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