Phil Taylor, E&E reporter
Published: Thursday, May 17, 2012
The Interior Department today finalized the terms of a June lease sale in the central Gulf of Mexico that it said could yield more than 1 billion barrels of oil.
The June 20 sale in New Orleans will be the Obama administration’s first in the central Gulf since the April 2010 Deepwater Horizon incident killed 11 people and spilled nearly 5 million barrels of crude.
A lease sale in the central Gulf a month before the spill garnered nearly $1 billion in winning bids for tracts spanning roughly 2.5 million acres.
“We continue to make millions of acres of federal waters and public lands available for safe and responsible domestic energy exploration and development,” Interior Secretary Ken Salazar said. Earlier this week, he released a report showing that nearly 72 percent of the 36 million acres of federal waters leased for oil and gas remains “idle,” meaning it is neither producing nor currently subject to approved or pending exploration or development plans (E&ENews PM, May 15).
Interior’s Bureau of Ocean Energy Management (BOEM) said it will include new stipulations in next month’s sale to encourage prompter exploration of the leases, as it did with last December’s lease sale in the western Gulf.
Stipulations include “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,” the agency said.
Minimum bids for deepwater leases will also be nearly tripled to ensure buyers intend to pursue development. An Interior study suggests that deepwater leases purchased for less than $100 per acre rarely see exploration or development drilling.
“This sale will continue making significant and promising areas available while encouraging diligent development and providing the
taxpayer a fair return,” BOEM Director Tommy Beaudreau said in a statement.
The agency said it will also notify bidders that they may need to comply with the terms of a recent settlement between the United States and Mexico governing development of a transboundary region the size of Delaware. The agreement still requires approval by Congress.
New lease sales in the aftermath of the BP PLC spill have drawn lawsuits from environmental groups. Groups including Oceana, Defenders of Wildlife, the Natural Resources Defense Council and the Center for Biological Diversity in December filed a complaint in a federal court in Washington, D.C., challenging the western Gulf lease sale, arguing Interior failed to fully gauge
the impacts of the BP oil spill and neglected to consider postponing the lease (E&ENews PM, Dec. 13, 2011).
That sale drew $338 million in winning bids for more than 1 million acres, which Interior officials heralded as a sign of continued industry interest despite a bevy of new safety standards and complaints of longer permitting times (E&ENews PM, Dec. 14, 2011).
Next month’s sale will be the last under Interior’s 2007-2012 leasing plan for federal waters. Beaudreau recently told a House committee he plans to finalize a new five-year plan by the end of next month and that no Gulf leases would be delayed. A western Gulf lease sale is planned for the end of the year.
Special thanks to Richard Charter