Gulf of Mexico lease sale attracts $872M in high bids
The U.S. Secretary of the Interior Sally Jewell announced that today’s oil and gas lease sales for federal waters in the Gulf of Mexico garnered $872,143,771 million in high bids on 329 tracts covering 1,707,358 acres.
“These lease sales underscore the President’s commitment to create jobs and home-grown energy through the safe and responsible exploration and development of our offshore energy resources,” Secretary Jewell said. “The Gulf is a critical component of our nation’s energy portfolio and holds vital energy resources that spur economic opportunities for Gulf producing states as well as further reduce our dependence on foreign oil.”
The Department of the Interior’s Bureau of Ocean Energy Management (BOEM) offered nearly 40 million acres covering tracts in the Central and Eastern planning areas of the Gulf of Mexico, and opened bids from previously offered acreage in the Western planning area. Today’s lease sales build on the first three sales held under the Obama Administration’s Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017 (Five Year Program) that offered more than 60 million acres for development and garnered $1.4 billion in bid revenues.
“While domestic energy production is growing rapidly in the United States, the Central Gulf of Mexico, as demonstrated by today’s lease sale, will continue to be one of the cornerstones of the nation’s energy portfolio,” said BOEM Director Tommy P. Beaudreau. “The Gulf of Mexico is one of the most productive basins in the world, and the Obama Administration supports the development of our nation’s offshore oil and gas resources in the Gulf of Mexico while protecting the human, marine and coastal environments, and ensuring a fair return to the American people.”
Domestic oil and gas production has grown each year the President has been in office, with domestic oil production currently higher than any time in two decades; natural gas production at its highest level ever; and renewable electricity generation from wind, solar, and geothermal sources has doubled. Combined with recent declines in oil consumption, foreign oil imports now account for less than 40 percent of the oil consumed in America – the lowest level since 1988.
Lease Sale 231 for the Central Planning Area attracted $850,809,921 in high bids on 326 blocks covering 1.7 million acres on the U.S. Outer Continental Shelf (OCS) offshore Louisiana, Mississippi and Alabama. A total of 50 offshore energy companies participated in submitting 380 bids.
Lease Sale 225, the first of two lease sales proposed for the Eastern Planning Area under the Five Year Program, is the first sale offering acreage in that area since 2008. The sale encompassed 134 whole or partial unleased blocks covering approximately 465,200 acres 125 miles south of eastern Alabama and western Florida. Though the sale did not receive any bids, continued interest in this area is evidenced by ongoing and planned activity on existing leases from past sales as well as from similar activity on existing leases immediately adjacent to this area within the Gulf’s Central Planning Area. The area will be offered to industry again in 2016 under the current Five Year Offshore Oil and Gas Leasing Program.
In addition to opening bids for these two sales, BOEM opened three pending bids submitted by a company in the August 2013 Western Planning Area Lease Sale 233 for blocks located or partially located within three statute miles of the maritime and continental shelf boundary with Mexico (U.S. – Mexico TransBoundary Area). A total of $21,333,850 in high bids was submitted on three tracts by one company. Leases awarded as a result of these bids will be subject to the terms of the U.S.-Mexico Transboundary Hydrocarbons Agreement, which was approved by Congress in the Bipartisan Budget Act of 2013 and recently signed by the President.
BOEM established the terms for these sales after extensive environmental analysis, public comment and consideration of the best scientific information available. These terms include measures to protect the environment, such as stipulations requiring that operators protect biologically sensitive features as well as providing trained observers to monitor marine mammals and sea turtles to ensure compliance and restrict operations when conditions warrant.
The terms also continue a range of incentives to encourage diligent development and ensure a fair return to taxpayers, including an increased minimum bid for deepwater tracts, escalating rental rates and tiered durational terms with relatively short base periods followed by additional time under the same lease if the operator drills a well during the initial period.
Following the sales, each bid will go through a strict evaluation process within BOEM to ensure the public receives fair market value before a lease is awarded.