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November 16, 2012
20-million-acre Gulf O&G sale

The Department of Interior’s Bureau of Ocean Energy Management (BOEM) announced that it will offer all unleased areas in the Western Gulf of Mexico Planning Area in an oil and gas (O&G) lease sale to be held November 28, 2012.  The sale comprises more than 20 million offshore acres and is the first offshore sale under the administration’s new Outer Continental Shelf Oil and Gas Leasing Program for 2012 to 2017.  According to BOEM, that program makes available for exploration and development all offshore areas with the highest conventional resource potential. Together, the areas include more than 75 percent of the nation’s undiscovered, technically recoverable offshore O&G resources.

Industry expects more

Energy companies have complained that the administration has failed to provide access to all areas of the Gulf with significant development potential or has installed unnecessarily burdensome restrictions in drilling permits.  BOEM counters that domestic O&G production has grown each year President Obama has been in office, with domestic oil production in 2011 higher than any time in nearly a decade and natural gas production at its highest level ever. Foreign oil imports now account for less than 50 percent of the oil consumed in America–the lowest level since 1995–adds BOEM.

The upcoming sale encompasses 3,873 blocks located from 9 to 250 miles offshore, in water depths ranging from 16 to more than 10,975 feet (5 to 3,346 meters). BOEM estimates the proposed lease sale could result in the production of 116 to 200 million barrels of oil and 538 to 938 billion cubic feet of natural gas.

Increased minimum bid

BOEM emphasizes that announcement of the sale followed extensive environmental analysis, public comment, and consideration of the best scientific information available. These terms include measures to protect the environment, including stipulations requiring that operators protect biologically sensitive features and provide 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.

Click here for the Final Notice of Sale information package.

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