New York Times
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August 19, 2011
By JOHN M. BRODER
WASHINGTON – The Interior Department is preparing to hold its first sale of offshore oil leases in the Gulf of Mexico since the Deepwater Horizon disaster last year, federal officials announced Friday.
The proposed sale, encompassing more than 20 million acres of the Western gulf, is scheduled for Dec. 14. It will be the first sale in the part of the gulf bordering Texas since the summer of 2009 and the first sale of any kind in the gulf since March 2010.
President Obama suspended leasing in the gulf after the Deepwater Horizon accident in April 2010, which killed 11 workers and spilled an estimated 4.9 million barrels of oil into the sea. He announced earlier this year that lease sales would resume later this year, but all drilling will be conducted under stricter environmental and safety regulations.
“This sale is an important step toward a secure energy future that includes safe, environmentally sound development of our domestic energy resources,” Ken Salazar, the Interior secretary, said. “Since Deepwater Horizon, we have strengthened oversight at every stage of the oil and gas development process, including deepwater drilling safety, subsea blowout containment, and spill response capability.
“Exploration and development of our western gulf’s vital energy resources will continue to help power our nation and drive our economy,” he added.
The lease offering includes parcels from nine to 250 miles offshore and in water depths from 16 to nearly 11,000 feet. The Interior Department estimates that the tract could produce 222 million to 423 million barrels of oil and 1.49 trillion to 2.65 trillion cubic feet of natural gas.
The agency is raising the minimum bid on leases in water deeper than 1,312 feet to $100 an acre from $37.50 to encourage companies to actively explore those areas and to compensate for the higher costs of dealing with a spill. Obama administration officials have complained that oil companies have locked up millions of acres of onshore and offshore oil resources but have not produced oil from them.
Officials said the change was based on an analysis of the last 15 years of lease sales in the gulf, which found that leases that received high bids of less than $100 an acre have experienced virtually no exploration and development. Regulators said they concluded that raising the minimum bid would discourage companies from purchasing leases and then sitting on them for years.
Officials of the Bureau of Ocean Energy Management, Regulation and Enforcement said they could not yet gauge industry interest in the parcels to be offered. Nor could they estimate how much money the government would reap from the auction, known as lease sale 218.
The last western gulf sale, held in August 2009, covered 18.4 million acres and brought in $111 million.
The last lease sale before the BP blowout and spill was in the central Gulf of Mexico. It covered almost 37 million acres and yielded $920 million.
The ocean energy management bureau “has taken aggressive steps to renew our commitment to the responsible stewardship of the U.S. Outer Continental Shelf,” said Michael R. Bromwich, director of the agency, which is responsible for monitoring offshore operations. “The decision to hold this sale was made after careful analysis of the best scientific information available and consideration of all public comments received.”
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http://www.chron.com/business/energy/article/December-Gulf-lease-requires-higher-minimum-bids-2133335.php
Houston Chronicle
December Gulf lease requires higher minimum bids
By JENNIFER A. DLOUHY, WASHINGTON BUREAU
Published 08:15 p.m., Friday, August 19, 2011
Oil and gas companies will have a shot at buying new drilling leases in the Gulf of Mexico this December – but this year, they will pay a higher price to participate in the sale.
The Bureau of Ocean Energy Management, Regulation and Enforcement confirmed Friday it is raising the cost of buying the leases in the western Gulf of Mexico. According to the agency, companies will now have to pay minimum bids of $100 per acre, up from $37.50 per acre previously for most tracts in the Gulf. The sale is set for Dec. 14.
The minimum bid for leases in already well-explored shallower water depths will remain unchanged at $25 per acre. The fee increase – and other details of the sale- were formally unveiled by the ocean energy bureau Friday.
Obama administration officials said the increase was justified because historically, leases purchased for less than $100 per acre have not been rigorously explored or developed.
“Raising the minimum bid will discourage companies from purchasing leases they are unlikely to explore in the near term,” the ocean energy bureau said.
The increase is part of an “effort to ensure that areas with the greatest resource potential are developed and to decrease the amount of leased acreage that is warehoused and goes unexplored,” BOEMRE director Michael Bromwich said in a statement. “The change in terms will better ensure that the nation’s resources are being developed in a timely manner.”
The lease sale – delayed because of last year’s oil spill – will take place in New Orleans. Dubbed Lease Sale 218, it will cover all available unleased areas – 3,900 blocks covering 20.6 million acres – in the western Gulf planning area off the Texas coast.
The National Ocean Industries Association, which represents more than 250 companies in the offshore energy sector, applauded the announcement. “This sale marks a key step toward restoring American jobs,” said Randall Luthi, NOIA president. “We look forward to continuing to work with the agency in ensuring clarity and efficiency in the leasing and permitting process while safely providing the offshore energy resources that help fuel America and our economy.”
Erik Milito, the upstream director for the American Petroluem Institute, also cheered the scheduling of the sale – the first of its kind since March 2010 – but was unenthusiastic about the planned cost increase.
A hasty move?
“We are hopeful that this does not discourage investment in these vital domestic resources,” Milito said. “We caution efforts that discourage investment in U.S. resources during this time of economic and regulatory uncertainty.”
But the administration insisted after reviewing historical auction data, “the increase will have little to no adverse impact on the timing or magnitude of production from tracts in this sale.”
Environmentalists said the administration was moving hastily.
“Rushing this lease sale puts marine ecosystems at risk before the ink is even dry on the impacts of the BP spill,” said Jacqueline Savitz, senior campaign director for the ocean conservation group Oceana. “BOEMRE appears to be caving to intense pressure from the oil industry to return to ‘business as usual,’ without regard for the extraordinary risks to already imperiled marine animals.”
The ocean energy bureau put the western Gulf sale on hold to complete a new environmental analysis of the region that was spurred by the Deepwater Horizon disaster. The research updates an older environmental impact statement conducted before the Gulf spill.
The sale queued up for December is generally viewed as less commercially attractive than a separate planned auction of deep-water tracts in the central Gulf region. That planning area includes areas near the Macondo well that blew out last year.
Bromwich has previously confirmed that a sale of central Gulf leases is on track for the first half of next year – before the end of the current five-year plan that governs oil and gas leases on the outer continental shelf. That plan expires on June 30.
jennifer.dlouhy@chron.com
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CNN
http://www.cnn.com/2011/US/08/19/gulf.lease.sale/#1_undefined,0_
U.S. to hold first Gulf lease sale since Deepwater Horizon spill
By the CNN Wire Staff
August 19, 2011 9:03 p.m. EDT
STORY HIGHLIGHTS
The sale will include more than 20 million acres in the western Gulf
“We have strengthened oversight at every stage,” says Interior Secretary Ken Salazar
The explosion on the Deepwater rig led to the release of more than 200 million gallons of oil
11 people working on the rig died in the explosion, while 16 others were injured
(CNN) — The U.S. government said on Friday it would hold its first oil and natural gas lease sale in the Gulf of Mexico since the Deepwater Horizon explosion and oil spill last year.
The proposed sale, scheduled for mid-December in New Orleans, will include more than 20 million acres in the western Gulf, according a statement from the Department of the Interior.
“This sale is an important step toward a secure energy future that includes safe, environmentally sound development of our domestic energy resources,” said Interior Secretary Ken Salazar.
“Since Deepwater Horizon, we have strengthened oversight at every stage of the oil and gas development process, including deepwater drilling safety, subsea blowout containment, and spill response capability. Exploration and development of our Western Gulf’s vital energy resources will continue to help power our nation and drive our economy,” he said.
The April 20, 2010, explosion on the Deepwater Horizon rig led to more than 200 million gallons of oil being released into the Gulf. Eleven people working on the rig died in the explosion, while 16 others were injured.
Besides the oil, hundreds of thousands of gallons of chemical dispersant went into the water. At the peak of the crisis, in June 2010, 37% of Gulf waters — a total of 88,522 square miles — were closed to fishing due to contamination.
The Bureau of Ocean Energy Management, Regulation and Enforcement estimates the proposed lease sale could result in the production of 222 million to 423 million barrels of oil and 1.49 trillion to 2.65 trillion cubic feet of natural gas.
The agency is hoping to increase the minimum bid for blocks in water depths of 400 meters and greater to $100 per acre, up from $37.50, according to the statement. It said leases that received high bids of less than $100 per acre have experienced virtually no exploration and development activities.
“The change in terms will better ensure that the nation’s resources are being developed in a timely manner,” said BOEMRE Director Michael Bromwich.
In October, Salazar announced that the U.S. government was lifting the moratorium on deep-water oil drilling put in place after the Gulf oil disaster.
Special thanks to Richard Charter