NewsThe Offshore Frontier

Department of Interior announces largest oil and gas lease sale in US history

US Secretary of the Interior Ryan Zinke has announced that the Department of Interior is proposing the largest oil and gas lease sale ever held in the United States: 76,967,935 acres in federal waters of the Gulf of Mexico, offshore Texas, Louisiana, Mississippi, Alabama and Florida. The proposed regionwide lease sale, offering an area about the size of New Mexico, is scheduled for March 2018 and includes all available unleased areas on the Gulf’s Outer Continental Shelf (OCS), surpassing last year’s regionwide lease sale by about 1 million acres.

“In today’s low-price energy environment, providing the offshore industry access to the maximum amount of opportunities possible is part of our strategy to spur local and regional economic dynamism and job creation and is a pillar of President Trump’s plan to make the United States energy dominant,” Secretary Zinke said. “The economic terms proposed for this sale include a range of incentives to encourage diligent development and ensure a fair return to taxpayers.”

Proposed Lease Sale 250, which will be live-streamed from New Orleans, will be the second offshore sale under the National OCS Oil and Gas Leasing Program for 2017-2022. Lease Sale 249, held in New Orleans last August, received $121 million in high bids. In addition to the high bids and rental payments, the department will receive royalty payments on any future production from these leases. OCS lease revenues are directed to the US Treasury, Gulf Coast states, the Land and Water Conservation Fund and the Historic Preservation Fund.

Many US senators, governors and congressmen voiced their approval of Secretary Zinke’s announcement. “In order to strengthen America’s energy dominance, we must anticipate and plan for our needs for decades to come,” said Sen. Lisa Murkowski, Chairman of the Senate Committee on Energy and Natural Resources. “The administration’s decision to move forward with the largest offshore lease sale in our nation’s history is a key part of that effort. Whether in Alaska or the Gulf of Mexico, we should all support responsible development because it creates high-paying jobs, strengthens national security and keeps energy affordable for our families and businesses.”

The estimated amount of resources projected to be developed as a result of the proposed regionwide lease sale ranges from 0.21 billion to 1.12 billion bbl of oil and from 0.55 trillion to 4.42 trillion cu ft (tcf) of gas. Most of the activity (up to 83% of future production) from the proposed lease sale is expected to occur in the Central Planning Area.

Proposed Lease Sale 250 includes 14,375 unleased blocks, located from 3 miles to 230 miles offshore, in the Gulf’s Western, Central and Eastern planning areas in water depths ranging from 9 ft to more than 11,115 ft (3 m to 3,400 m). Excluded from the lease sale are blocks subject to the Congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006; blocks that are adjacent to or beyond the US Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap; and whole blocks and partial blocks within the current boundary of the Flower Garden Banks National Marine Sanctuary.

“American energy production can be competitive while remaining safe and environmentally sound,” said Vincent DeVito, Counselor for Energy Policy at Interior. “People need jobs, the Gulf Coast states need revenue, and Americans do not want to be dependent on foreign oil. We have heard their message loud and clear.”

The lease sale terms include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species and avoid potential conflicts associated with oil and gas development in the region. The terms and conditions for Lease Sale 250 in the Proposed Notice of Sale are not final. Different terms and conditions may be employed in the Final Notice of Sale, which will be published at least 30 days before the sale.

The Bureau of Ocean Energy Management estimates that the OCS contains about 90 billion barrels of undiscovered technically recoverable oil and 327 tcf of undiscovered technically recoverable gas. The Gulf of Mexico OCS, covering about 160 million acres, has technically recoverable resources of over 48 bbl of oil and 141 tcf of gas.

 

 

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