Phil Taylor, E&E reporter
Published: Thursday, November 10, 2011
The Interior Department today spelled out the final terms for its first lease sale in the Gulf of Mexico since the BP PLC Deepwater Horizon oil spill began a year and a half ago. As previously announced, the sale will nearly triple the minimum bids allowed for blocks in water depths of at least 1,300 feet. The move aims to discourage companies from purchasing leases they don’t intend to develop and to ensure taxpayers receive a fair return on public minerals, Interior said.
The Dec. 14 sale in New Orleans will offer every unleased block in the western planning area, including 21 million acres stretching as far as 250 miles from the Texas shore. Interior’s Bureau of Ocean Energy Management estimated the sale could
result in the production of up to 423 million barrels of oil and 2.65 trillion cubic feet of natural gas.
“This sale is an important step toward a secure energy future that includes safe, environmentally-sound development of our domestic energy resources that will continue to reduce our dependence on foreign oil and create jobs here at home,” Interior Secretary Ken Salazar said in a statement. “Since the Deepwater Horizon spill, 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.”
The sale will increase the minimum bid amount for blocks in water depths of 1,312 feet and greater from $37.50 to $100 per acre. The National Ocean Industries Association praised the sale, but said it was unsure what impact the higher minimum bidding rules would have on industry. “It remains to be seen whether the increased costs of minimum bids will have an effect on the bidding,” NOIA President Randall Luthi said in a statement. “Companies could forego bidding on lesser known tracts and thus the federal government will receive nothing, not bonus bids or rental fees, for tracts that might have generated interest in earlier sales.” He added that while Interior has accelerated its approval of certain exploration permits, he was still concerned over how long it has taken to approve exploration plans. “This sale will help gauge industry’s confidence in whether the current permitting process will allow buyers to actually develop the leases they purchase,” he said.
Environmental stipulations will require operators to protect biologically sensitive features, as well as marine mammals and sea
turtles, Interior said.
Special thanks to Richard Charter