Newly installed Interior Secretary Sally Jewell Wednesday announced that more than 21 million acres will be offered offshore Texas in the Western Gulf of Mexico (GOM) in a federal lease sale in August for oil and natural gas exploration and development.

Proposed Lease Sale 233 would be the third offshore auction under the Obama administration’s Outer Continental Shelf (OCS) leasing program for 2012-2017. The sale follows two auctions in the current five-year leasing program: a 39-million-acre sale held in June 2012, which attracted more than $1.2 billion in high bids, and a 20-million-acre sale held last November that netted nearly $134 million (see Daily GPI, Nov. 29, 2012; June 21, 2012).

“The Gulf of Mexico is a cornerstone of the United States’ energy portfolio,” said Jewell, who was sworn in as Interior secretary on April 12.

Lease Sale 233 is to include 3,953 blocks, covering about 21.1 million acres that are nine to 250 miles offshore, in water depths ranging from 16 to more than 10,975 feet. Interior’s Bureau of Ocean Energy Management estimates that the proposed sale could result in production of 938 Bcf of natural gas and 116-200 million bbl of oil.

The Energy Policy Act (EPAct), which provides for royalty relief on natural gas production from deep wells in waters that are more than 200 meters deep, but less than 400 meters, will sunset on May 3, and therefore it would not be offered in Lease Sale 233. Ultra-deep gas royalty relief on production from offshore wells that are greater than 20,000 feet deep would still be available, according to Interior.

The terms and conditions outlined for Sale 233 in the proposed notice of sale are not final, the department noted. The final terms and conditions of the sale are to be published in the Federal Register at least 30 days before the sale.

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