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Protesters crash otherwise underwhelming Gulf of Mexico lease sale

March 24, 2016

Protesters crash otherwise underwhelming Gulf of Mexico lease saleThe latest U.S. Gulf of Mexico lease sale has attracted $156 million in high bids for 128 tracts covering 693,962 acres in the Central Planning Area of the Outer Continental Shelf offshore Louisiana, Mississippi and Alabama.

This, combined with no bids for the Eastern Gulf Sale, translates into one of the lowest industry interest in the history of such sales. While attracting bids, the lease sale, held in the Mercedes Benz Superdome of New Orleans,  also attracted a crowd of protesters who barged in a hall where the lease sale was being held, holding “Keep it in the ground banners” and chanting: “”The Gulf is not for profit. It’s not for sale, get off it.

According to the U.S. Bureau of Ocean Energy Management (BOEM), a total of 30 offshore energy companies submitted 148 bids. The sum of all bids received totaled $179,172,819. No bids were received in the Eastern Planning Area.

“The Gulf remains a critical component of our nation’s energy portfolio and holds important energy resources that spur economic opportunities for Gulf producing states while reducing our dependence on foreign oil,” said Assistant Secretary Schneider. “Though these sales reflect today’s market conditions and industry’s current development strategy, they 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.”

The Department of the Interior’s Bureau of Ocean Energy Management (BOEM) offered nearly 45 million acres covering tracts in the Central and Eastern planning areas of the Gulf of Mexico.

“As one of the most productive basins in the world, the Gulf of Mexico continues to be the keystone of the Nation’s offshore oil and gas resources,” Director Hopper said. “The decline in oil prices and low natural gas prices obviously affect industry’s short-term investment decisions, but the Gulf’s long-term value to the nation remains high and the President’s energy strategy continues to offer millions of offshore acres for development while protecting the human, marine and coastal environments, and ensuring a fair return to the American people.”

Central Planning Area (CPA) Sale 241 attracted $156,385,610 in high bids on 128 blocks covering 693,962 acres. A total of 30 offshore energy companies participated in submitting 148 bids totaling $179,172,819. The CPA encompasses 8,349 unleased blocks, covering 44.3 million acres, located from three to 230 nautical miles offshore Louisiana, Mississippi and Alabama, in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters).

Following yesterday’s sale, the bids will now go through a 90-day evaluation process to ensure the public receives fair market value before a lease is awarded, BOEM said.

Worth noting, sale 226, the second of two lease sales proposed for the Eastern Planning Area under the current Five Year Program, received no bids.

The area encompassed 162 whole or partial unleased blocks covering 595,475 acres in the Eastern Planning Area not subject to congressional moratorium. The blocks are located at least 125 statute miles offshore in water depths ranging from 2,657 feet to 10,213 feet (810 to 3,113 meters). The area is south of eastern Alabama and western Florida; the nearest point of land is 125 miles northwest in Louisiana.

BOEM said that 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.

Most of the Eastern Gulf of Mexico Planning Area (EPA) cannot be offered for lease until 2022 as part of the Gulf of Mexico Energy Security Act of 2006.

 

NOIA: Small, but good.

Randall Luthi, President of the National Ocean Industries Association (NOIA), said: “Considering the current economic and regulatory environment, today’s Central Gulf of Mexico sale, though small, underscores the importance of offshore development to the U.S. economy and energy security. It is also a testament to thousands of workers who are dedicated to seeing that U.S. consumers are provided a choice of reliable and reasonably priced energy.”

He added: “Even though today’s Eastern Gulf sale was a non-starter, and the Central Gulf sale saw the lowest industry interest in the history of such sales, the companies that stepped up and submitted bids demonstrated their commitment to staying in U.S. waters and producing home grown energy, despite a tough operating environment.

“Over the years, offshore lease sales in the Gulf of Mexico have contributed billions of dollars to the U.S. Treasury ($80 billion between 2005 and 2014), and recently that revenue stream began flowing to Gulf of Mexico states as well. What’s more, the Energy Information Agency (EIA) predicts that U.S. oil production in the Gulf of Mexico will reach record highs in 2017, which will continue to boost Gulf state economies. The success of oil and natural gas production in the Gulf of Mexico is the result of decisions made a decade or more ago. Efforts to restrict offshore development will have far reaching consequences that will echo long beyond this Administration.

“While it is everyone’s right to protest, many of the demonstrators could not have been here in New Orleans today without the oil and natural gas..”

Regarding the protests against the lease sale Luthi said: “It is easy to contrast these hard working professionals against the disruptive demonstrators at the Superdome today. If these protesters have the opportunity to visit more of the Gulf of Mexico, they will see just how important oil and natural gas is to the residents of the Gulf Coast. These are people that love to fish and recreate offshore; no one is more concerned with the environment, and they will do all they can to see that the oil and natural gas off their coast is developed safely. The Gulf of Mexico is the source of 20% of our domestic oil and natural gas supply, and this is energy for all of us. While it is everyone’s right to protest, many of the demonstrators could not have been here in New Orleans today without the oil and natural gas produced as a result of the very sales they oppose; it is difficult to overlook the irony.

Short sighted decision

Luthi also reflected to the recent decision by the Obama administration to keep the Atlantic Ocean off limits for exploration: “I find it peculiar that the same Federal department that will collect, distribute, and even spend the bonus bids submitted by industry today, took a proposed Atlantic lease sale off the table just last week. That short-sighted decision forfeits tremendous future economic benefits, risks our nation’s recently earned status as the global energy leader, and keeps nearly 87% of the U.S. outer continental shelf off limits to exploration, as it has been for decades.“