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BOEM Finalizing GOM Lease Extension Plan

The Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) is finalizing a plan to extend deepwater leases in the Gulf of Mexico (GOM) for one year.

BOEM spokeswoman Melissa Schwartz confirmed to NGI that the agency is setting up rules by which companies could apply for the lease extensions. She said eligible leases would need to be for depths of at least 500 feet and set to expire before Dec. 31, 2015. Schwartz said about 1,450 leases are eligible for the one-year extension.

"We will issue information to operators in the coming weeks," Schwartz said Friday. She added that the extension plan was a clarification of President Obama's weekly radio address on May 14 when he announced that the federal government was "taking steps to give companies time to meet higher safety standards when it comes to exploration and drilling. [We will be] extending drilling leases in areas of the Gulf that were impacted by the temporary moratorium."

The BOEM action comes three months after the Obama administration said it had lifted a moratorium on deepwater drilling in the GOM. The moratorium was enacted in the wake of last year's Macondo well blowout, which sank the Deepwater Horizon drilling rig (see Daily GPI, April 22, 2010).

Erik Milito, spokesman for the American Petroleum Institute (API), told NGI that the organization was pleased with the lease extension plans but said they could have been more inclusive.

"We think it's a great step," Milito said Friday. "It's important that the companies that were unable to use their leases get an extension so they have the opportunity to use them. But at the same time, the moratorium applied to all deepwater leases. We think the blanket should actually cover all of them, not just those that would be expiring in 2015."

According to the API, there are more than 3,700 deepwater leases in the GOM. Milito said the terms ranged from five to eight to 10 years, depending on water depth.

Asked if the API believed there would be further developments on the lease extension issue, Milito said "there may be some work on the legal side to see if this should apply more broadly, but I don't know if any companies are going to take any further action. Unless Congress acts, this may be the end game. We'll have to see if any kind of legislation will move forward that creates more of a blanket approach to include all of the leases. There have been some proposals in Congress that would have extended these leases more broadly."

On June 3 BOEM said it was making changes designed to speed up the application process for oil and gas permits in the GOM (see Daily GPI, June 6). The agency also said it has approved 43 deepwater permits for 15 unique wells since March. The wells will all require subsea containment structures.

Both measures -- the lease extensions and the streamlined permit process -- are in response to anger and frustration among the oil and gas industry, elected officials from the Gulf Coast and groups like the API, who claim the moratorium has had a devastating effect on the industry and the economy (see Daily GPI, March 3; Feb. 18; Jan. 27).

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