In the final lease sale under the existing five-year Outer Continental Shelf plan, to be held on June 20, the Interior Department will make available to producers all unleased areas in the Central Gulf of Mexico (GOM) Planning Area offshore Louisiana, Mississippi and Alabama, including 7,276 blocks on about 38.6 million acres.
Interior's Bureau of Ocean Energy Management (BOEM) estimates that the sale could result in the production of more than 1 billion bbl of oil and more than 4 Tcf of natural gas. "The Gulf of Mexico is the crown jewel of the U.S. Outer Continental Shelf, and home to a number of world-class producing basins, including many in deepwater areas that are becoming increasingly accessible with new technology," BOEM Director Tommy Beaudreau said Thursday in announcing the blocks to be auctioned.
The blocks are located from three to about 230 miles offshore in water depths ranging from nine to more than 11,115 feet in the Central GOM, a region that BOEM estimates contains close to 31 billion bbl of oil and 134 Tcf of gas reserves that currently are undiscovered and technically recoverable. It will be the first lease sale in the central Gulf since the Macondo platform explosion and oil spill in April 2010.
Following up on its critical report earlier in the week of leased properties sitting idle, the lease sale notice included a "range of incentives" to encourage prompt development of the reserves and ensure a fair return to taxpayers. The measures include "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 department said.
BOEM also has increased the minimum bid in the deepwater to $100 per acre, up from only $37.50. According to Interior, an analysis over the last 15 years of lease sales in the GOM showed that deepwater leases that received high bids of less than $100 per acre, adjusted for energy prices at the time of each sale, experienced virtually no exploration and development drilling.
In its Tuesday report on the status of leased acreage, Interior said more than 70% of the offshore acres under lease to oil and natural gas producers are inactive, while 56% of onshore leases on public lands are not being used. Of the total 35.8 million acres leased in the offshore the report estimated that 25.7 million are inactive, and only 10 million are actively producing (see Daily GPI, May 16).
The lease sale will take place at the Mercedes-Benz Superdome in New Orleans.
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