Following up on President Obama’s promise to support domestic energy, the administration on Thursday said the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) will hold consolidated Central Gulf of Mexico (GOM) Lease Sale 216/222 in New Orleans on June 20.
The proposed oil and gas lease sale will include all available unleased areas in the Central Planning Area offshore Louisiana, Mississippi and Alabama, and make nearly 38 million acres available, BOEM said.
“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.”
Some in the industry were not impressed.
“We’re pleased to hear that the long-delayed Central Gulf of Mexico sale will finally occur in June,” Randall Luthi, president of the National Ocean Industries Association said. “This sale has been on the books since 2007 under the current five-year plan. It’s nothing new, nor is the claim that 75% of the resources on the OCS are open to development. It is just smoke and mirrors to hide the fact that we’re still exploring in the same areas we have been for the past 30 years.”
Lease Sale 216 had originally been scheduled for last year but was put on hold following the blowout of BP plc’s Macondo well in the GOM while BOEM called for a supplemental environmental impact statement. Sale 222 was scheduled for this year.
Luthi said “seven sales scheduled in the 2007-2012 plan were flat out canceled: one off the coast of Virginia, one in the western GOM and five off the coast of Alaska. So while we move one step forward today, we are already several steps behind. If the president and his administration are serious about more access, they should at least put Virginia offshore exploration and development back on the table.”
Luthi reminded the industry that comments are currently being taken on the next five-year plan, which should be effective as of July 1, 2012. He said the proposed five-year plan “currently does not include any proposed sales outside the areas that have been explored for 30 years. I am hopeful that the American public, through the comment process, will stress how important it is to increase our home grown energy program and greatly expand the proposed strategy.”
The proposed lease sale includes approximately 7,250 unleased blocks 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 GOM, a region that BOEM estimates contains close to 31 billion bbl of oil and 134 Tcf of natural gas that is currently undiscovered and technically recoverable. BOEM estimates that the Central Gulf sale could result in the production of 1 billion bbl of oil and 4 Tcf 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,'” BOEM said. “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.” BOEM recently increased the minimum bid for deepwater acreage to $100/acre from $37.50/acre.
A proposed notice of sale information package is available on the BOEM website, from the Gulf of Mexico Region’s public information unit at 1201 Elmwood Park Blvd., New Orleans, LA 70123, or at 800-200-GULF. A notice of availability of the proposed notice of sale was published in the Federal Register Thursday.
The lease sale announcement follows Obama’s third annual State of the Union speech Tuesday night, in which the president for the first time issued a strong call for development of domestic natural gas and oil as part of “an all-out, all-of-the-above strategy that develops every available source of American energy” (see Daily GPI, Jan. 26). In that speech, Obama said he was directing his administration “to open more than 75% of our potential offshore oil and gas resources.”
Those resources will be made available through BOEM’s five-year program for 2012-2017, the agency said Thursday. BOEM recently completed a draft environmental impact statement (DEIS) for a series of five oil and gas lease sales tentatively scheduled for 2012-2017 in the Western and Central GOM planning areas (see Daily GPI, Jan. 3). Included in the proposal are tentative plans for Western Planning Area Lease Sales 229, 233, 238, 246 and 248 and Central Planning Area Lease Sales 227, 231, 235, 241 and 247 offshore Texas, Louisiana, Mississippi and Alabama.
ConocoPhillips in mid-December bid $103.2 million for a tract in the western GOM, making it the highest bidder in the first auction held by the federal government in the region since the blowout of the Macondo well (see Daily GPI, Dec. 15, 2011). Sale 218, the last remaining sale in the Western Gulf Planning Areas in the 2007-2012 Outer Continental Shelf leasing program, attracted a total of $337.7 million in high bids and included 20 companies submitting 241 bids on 191 tracts comprising more than one million acres offshore Texas in the areas of Matagorda Island, Brazos, Galveston, High Island, West Cameron, East Breaks, Garden Banks, Alaminos Canyon and Keathley Canyon, BOEM said.
Obama was expected to discuss the proposed lease sale and other energy issues — including efforts to promote the use of natural gas vehicles — in a series of appearances scheduled Thursday in Nevada.
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