Western Gulf of Mexico Lease Sale Yields $133.8 Million in High Bids on Over 652,520 Acres, Only Latest in a Series of Recent Major Offshore Oil and Gas Sales.
As part of President Obama’s all-of-the-above energy strategy to continue to expand safe and responsible domestic energy production, the Department of the Interior’s Bureau of Ocean Energy Management today held Western Gulf of Mexico Lease Sale 229, which offered over 20 millions acres and attracted $133,767,074 in high bids for 116 tracts covering 652,522 acres on the U.S. Outer Continental Shelf (OCS) offshore Texas. A total of 13 offshore energy companies submitted 131 bids. The Western Gulf of Mexico Lease Sale builds on two major Gulf of Mexico lease sales in the past year alone, a 21 million acre sale held last December and a 39 million acre sale held in June.
“At President Obama’s direction, his Administration continues to implement a comprehensive, all-of-the-above energy strategy, expanding domestic production, reducing our dependence on foreign oil, and supporting jobs,” said Interior Secretary Ken Salazar. “Developing public energy resources in the Gulf of Mexico continues to generate much needed revenue for local communities while helping to power our nation and fuel our economy.”
Lease Sale 229 offered more than 20 million acres for oil and gas development on the OCS and supports the Administration’s goal of continuing to increase domestic oil and gas production, which has grown each year the President 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.
The lease sale offered all unleased areas in the Western Gulf of Mexico planning area, including 3,873 tracts from nine to more than 250 miles off the coast, in depths ranging from 16 to more than 10,975 feet (five to 3,346 meters). BOEM estimates the 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.
The sale was the first under the Administration’s new Outer Continental Shelf Oil and Gas Leasing Program for 2012–2017 (Five Year Program), which makes available for exploration and development all of the offshore areas with the highest conventional resource potential that together include more than 75 percent of the Nation’s undiscovered, technically recoverable offshore oil and gas resources. BOEM also recently announced that the next Central Gulf of Mexico lease sale, proposed Lease Sale 227, will take place on March 20, 2013, making 38 million acres available offshore Louisiana, Mississippi and Alabama.
“This offshore oil and gas lease sale is part of our all-of-the-above energy strategy and supports continued growth in safe and responsible domestic oil and gas production,” said BOEM Director Tommy P. Beaudreau, who opened this morning’s sale. “This is the first sale under the President's Five Year Program, in which we are making available all of the offshore areas with the highest conventional resource potential for exploration and development.”
Today’s highest bid on a single tract was $17,221,317, submitted by Chevron U.S.A., Inc. for East Breaks Block 546. Chevron U.S.A., Inc. submitted the highest total amount in bonus bids, totaling $56,031,0991 on 28 tracts. BOEM received at least one bid within the 3 statute mile boundary area north of the continental shelf boundary between the United States and Mexico. Any bids submitted on blocks in the area will not be opened until on or before 30 days following the approval by the U.S. Congress of the agreement between the U.S. and Mexico or May 31, 2013, at which time the Secretary of the Interior may determine whether it is in the best interest of the United States either to open any such bids or to return the bid unopened.
BOEM established the terms for this sale 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 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.
Following the sale, each bid will now go through a strict evaluation process within BOEM to ensure the public receives fair market value before a lease is awarded. Sale statistics for Sale 229 are available at: http://www.boem.gov/Sale-229.