Western GOM Lease Sale Attracts Bids of $337 Million
The Department of the Interior’s Bureau of Ocean Energy Management announced that its Western Gulf of Mexico Oil and Gas Lease Sale 218, held today in New Orleans, attracted $337,688,341 in high bids and included 20 companies submitting 241 bids on 191 tracts comprising over a million acres offshore Texas.
The sum of all bids received totaled $712,725,998. This announcement is consistent with steps President Obama announced in May 2011 to expand domestic oil and gas production safely and responsibly. “Today’s lease sale, the first since the tragic events of Deepwater Horizon, continues the Obama administration’s commitment to a balanced and comprehensive energy plan,” said Secretary of the Interior Ken Salazar, who attended the sale and provided opening remarks. “Offshore drilling will never be risk free, but over the last 19 months we have moved quickly and aggressively with the most significant oil and gas reforms in U.S. history to make it safer and more environmentally responsible. Today’s sale is another step in ensuring the safe and responsible development of the nation’s offshore energy resources.”
Sale 218, the last remaining Western Gulf Planning Area sale scheduled in the 2007-2012 Outer Continental Shelf (OCS) Oil and Natural Gas Leasing Program, made available 3,913 unleased blocks covering more than 21 million acres – equal to an area the size of South Carolina, or 3 times the size of New Jersey, or 21 times the size of Rhode Island. The blocks are located from nine to about 250 miles offshore, in water depths ranging from 16 to more than 10,975 feet (5 to 3,346 meters).
“Before moving forward with Sale 218, we conducted a rigorous analysis of the environmental effects of the Deepwater Horizon oil spill on the Western Gulf of Mexico,” said BOEM Director Tommy P. Beaudreau. “We also took a fresh look at the economics of leasing and introduced a number of lease terms designed to ensure fair return to the American people, provide incentives to promote diligent development, and help reduce the amount of leased acreage that is warehoused and left unexplored.”
Lease terms included escalating rental rates to encourage faster exploration and development of leases and include shorter lease terms for shallower water in order to encourage timely development. BOEM has increased its minimum bid requirement to $100 per acre, up from $37.50 in previous sales, after rigorous historical analysis which showed that leases that received high bids of less than $100 per acre have experienced virtually no exploration and development activities. Lessees will also have to comply with a series of environmental stipulations, including requirements that operators protect biologically sensitive features, as well as marine mammals and sea turtles, and employ trained observers to ensure compliance and restrict operations when conditions warrant.
Each high bid on a tract will go through a strict evaluation process within BOEM to ensure the public receives fair market value before a lease is awarded. The highest bid received on a tract was $103,200,000 submitted by ConocoPhillips Company for Keathley Canyon, Block 95. ConocoPhillips Company was the apparent high bidder on 75 blocks, the most for any company, and had the most in bonus bids, $157,816,740. Sale statistics for Western Sale 218 are available at: http://www.boem.gov/Oil-and-Gas-Energy-Program/Leasing/Regional-Leasing/Gulf-of-Mexico-Region/Lease-Sales/218/Western-Planning-Area-Lease-Sale-218-Information.aspx