Western Gulf leases hit auction block in November

07 23, 2012 by Fuel Fix

Oil and gas companies will have a chance to bid on drilling rights in the western Gulf of Mexico in a lease sale scheduled for Nov. 28.

The auction of offshore drilling leases, which had been planned but not formally scheduled until today, is the first that will be conducted under the Obama administration’s new five-year plan governing offshore lease sales until June 30, 2017.

The announcement of a sale date was touted by the White House and Interior Department as evidence of President Barack Obama’s “all-of-the-above energy strategy to expand safe and responsible domestic energy production.”

The formal announcement will be published in the Federal Register as soon as Tuesday.

Energy companies will have a chance to bid on their choice of 3,800 blocks covering roughly 20.5 million acres in the western Gulf lease sale. The leases cover tracts as shallow as 16 feet and as deep as 11,000 feet.

According to BOEM, the areas up for leasing could yield 116 million to 200 million barrels of oil and 538 billion to 938 billion cubic feet of natural gas.

The government traditionally holds open lease sales in the Gulf of Mexico, with companies getting a shot at most unleased acreage. Obama’s Interior Department is taking a different approach in other regions, including the Arctic, where federal officials will decide what specific tracts are up for sale after taking nominations from potential bidders, hearing from stakeholders and assessing data.

Under the five-year lease plan, the Interior Department’s Bureau of Ocean Energy Management is set to hold 12 Gulf of Mexico lease sales before June 30, 2017. In addition, the government is planning three auctions of leases in the Cook Inlet near Anchorage and the Chukchi and Beaufort seas north of Alaska.

But the plan rules out lease sales in Atlantic waters, despite pressure from Virginia officials eager for oil and gas development off the commonwealth’s shores.

Industry leaders and their allies on Capitol Hill have described the administration’s plan as timid and “energy-restricting.”

House Republican leaders are pushing a much more aggressive alternative plan that would include an auction of those waters near Virginia, as well as 27 other lease sales. Advanced by House Natural Resources Committee Chairman Doc Hastings, R-Wash., the Republican alternative would give oil companies several opportunities to bid on drilling rights in the Chukchi and Beaufort seas, and would schedule a sale of North Aleutian Basin drilling rights in 2016. Companies also would have two cracks at leases off the south California coast in 2014 and 2017.