USA: BOEM Announces 20 Mln Acre Oil and Gas Lease Sale Offshore Texas

As part of President Obama’s all-of-the-above energy strategy to expand safe and responsible domestic energy production, Secretary of the Interior Ken Salazar and Bureau of Ocean Energy Management (BOEM) Director Tommy P. Beaudreau announced that BOEM will offer more than 20 million acres offshore Texas for oil and gas exploration and development in a lease sale that will include all available unleased areas in the Western Gulf of Mexico Planning Area.

Proposed Western Gulf of Mexico Lease Sale 229, scheduled to take place in New Orleans on November 28, 2012, will be the first offshore sale under the Administration’s new Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017 (Five Year Program). Announced last month, the Five Year Program makes more than 75% of recoverable energy resources in our oceans available for exploration and development, consistent with President Obama’s commitment to continue to expand domestic energy production and reducing America’s dependence on foreign oil.

“We are moving forward expeditiously to create jobs by implementing the President’s offshore oil and gas strategy for the next five years – a smart plan that focuses on the areas that contain the overwhelming majority of the energy resources,” said Secretary Salazar. “With comprehensive safety standards in place, this sale will help us to continue to responsibly grow America’s energy economy and reduce our dependence on foreign oil.”

Since President Obama took office, domestic oil and gas production has increased each year, with domestic oil production currently at an 8-year high and foreign oil imports now accounting for less than 50 percent of the oil consumed in America – the lowest level since 1995.

The sale will include approximately 3,800 blocks, covering roughly 20.5 million acres, located from nine 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.

“This lease sale will make available millions of acres in the Gulf of Mexico, where there are vast untapped oil and gas resources and industry is working hard to expand oil and gas exploration and development,” said BOEM Director Beaudreau. “This sale is part of the regionally tailored approach that we are taking under the Five Year Program, which is central to the balanced, all-of-the-above strategy we need to meet the nation’s energy needs.”

The decision to move forward with plans for this lease sale follows extensive environmental analysis, public comment, and consideration of the best scientific information available. Earlier this month, BOEM completed a Final Environmental Impact Statement with analysis to support decision-making for this and other Western and Central Gulf of Mexico lease sales scheduled as part of the next Five Year Program.

The proposed terms for the lease sale include a series of measures to protect the environment, including stipulations requiring that operators protect biologically sensitive features. The stipulations for marine mammals and sea turtles will require trained observers to ensure compliance and restrict operations when conditions warrant. The terms also include 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.

This sale will build on other actions taken by the Obama administration to expand safe domestic oil and gas development, including two successful Gulf of Mexico lease sales within the past year. Last month, BOEM offered over 39 million acres as part of Central Gulf of Mexico Sale 216/222, which attracted $1.7 billion in high bids for more than 2.4 million acres. That followed Western Gulf of Mexico lease sale 218 in December 2011, which offered 21 million acres and attracted $324,971,001 in accepted high bids.

The terms and conditions outlined for November’s Sale 229 in the Proposed Notice of Sale are not final. Different terms and conditions may be employed in the Final Notice of Sale which will be published at least 30 days before the sale.

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Press Release, July 24, 2012