Interior Department issues final notice for June Gulf oil, gas lease sale

05 17, 2012 by The Times-Picayune

The Interior Department Thursday issued the final notice for an oil and gas lease sale to be held in New Orleans June 20 that will make available all unleased areas in the Central Gulf of Mexico for a total of more than 38 million acres offshore Louisiana, Mississippi and Alabama. The sale, which will take place at the Mercedes-Benz Superdome, could, according to estimates by Interior's Bureau of Ocean Energy Management, lead to the production of more than one billion barrels of oil and more than 4 trillion cubic feet of natural gas.

"The Gulf of Mexico is the crown jewel of the U.S. Outer Continental Shelf, and home to a number of world-class producing basins -- including many in deepwater areas that are becoming increasingly accessible with new technology," said Bureau of Ocean Energy Management Director Tommy Beaudreau. "There have been a number of significant discoveries in the past two years alone, and this sale will continue making significant and promising areas available while encouraging diligent development and providing the taxpayer a fair return."

"As part of the Obama administration's all-of-the-above energy strategy, we continue to make millions of acres of federal waters and public lands available for safe and responsible domestic energy exploration and development," said Secretary of the Interior Ken Salazar. "Holding this lease sale is one of the many administrative steps we are taking, at the president's direction, to increase U.S. production, reduce dependence on foreign oil, and incentivize early production on leases that industry holds."

According to Interior, the 7,276 blocks that will be part of the sale are located from three to about 230 miles offshore, in water depths ranging from nine to more than 11,115 feet in the Central Gulf of Mexico, a region that BOEM estimates contains close to 31 billion barrels of oil and 134 trillion cubic feet of natural gas that are currently undiscovered and technically recoverable.

The Final Notice of Sale package issued by Interior describes all terms and conditions for Central Gulf Lease Sale 216-222. According to Interior, "these include a range of incentives that encourage prompt development and ensure a fair return to taxpayers, as described in a recent report by the Department of the Interior on the status of Oil and Gas Lease Utilization. These measures 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."

BOEM has also increased the minimum bid in deepwater to $100 per acre, up from only $37.50. That change was based on the finding by Interior that, over the course of the last 15 years, deepwater leases that went for lesser amounts "experienced virtually no exploration and development drilling."

The terms of the sale also, according to Interior, reflect lessons learned from the Deepwater Horizon disaster.

According to Interior, "these include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential conflicts associated with oil and gas development in the region."

For this sale, BOEM has also adopted a stipulation to notify bidders that the terms stated in a February 20, 2012 agreement between Mexico and the United States regarding the exploration and development of oil and natural gas reservoirs along the United States' and Mexico's maritime boundary may apply to some of the blocks offered in this sale, should the agreement enter into force.

The Final Notice of Sale information package is available at: Copies can also be requested from the Gulf of Mexico Region's Public Information Office at 1201 Elmwood Park Boulevard, New Orleans, LA 70123, or at 800-200-GULF (4853).

The Final Notice of Sale and the Notice of Availability of a Record of Decision on a Final Supplemental Environmental Impact Statement for Lease Sale 216/222 are available today in the Federal Register at: