Largest US Offshore Drilling Lease Announced

FRIDAY, OCTOBER 27, 2017


The U.S. Department of the Interior has announced what is projected to be the largest oil and gas lease sale in the country’s history, which will include 76.9 million acres in the Gulf of Mexico, drawing both praise and concern.

Scheduled to take place in March 2018, the lease sale is slated to include federal offshore waters off of Texas, Louisiana, Alabama, Mississippi and Florida.

The Bureau of Ocean Management estimates that the Gulf’s outer continental shelf holds more than 48 billion barrels of oil and 141 trillion cubic feet of gas, all technically recoverable. The rest of the OCS holds 90 billion barrels of oil and 327 trillion cubic feet of recoverable gas.

The Proposed Lease Sale 250 will be the second under the National Outer Continental Shelf Oil and Gas Leasing Program for 2017-22, noted Energy Business Review. This includes 14,375 unleased blocks.

Lease Sale 249 was held in New Orleans last August, according to the Department of the Interior, and resulted in $121 million in bids on 508,096 acres.

Offshore Leasing

Currently, the offshore sector is struggling with low oil prices, with crude oil sitting at $52.47 a barrel in New York on Tuesday (Oct. 24), up 50 cents, noted the Houston Chronicle.

To accommodate the low cost of oil, companies have remained focused on lower cost onshore shale fields while also going on to divest offshore holdings and avoiding the acquisition of new tracks.

“In today’s low-price energy environment, providing the offshore industry access to the maximum amount of opportunities possible is part of our strategy to spur local and regional economic dynamism and job creation and a pillar of President Trump’s plan to make the United States energy dominant,” Ryan Zinke, U.S. Secretary of the Interior, said in a statement.

“And the economic terms proposed for this sale include a range of incentives to encourage diligent development and ensure a fair return to taxpayers.”

According to Baker Hughes, there are currently 20 rigs operating in the Gulf of Mexico—17 recovering oil, and three natural gas. The Gulf’s rig count has generally trended downward over the past decade, but production has continued to rise; the U.S. Energy Information Administration reports that in July, the Gulf produced a record 1.7 million barrels per day. 

Economic Move

The offshore leasing plan plays into President Donald J. Trump’s economic strategy for making the United States one of the world’s biggest energy producers, according to the Chronicle.

Lawmakers and political leaders have praised the move for its potential benefits for the economy, but environmentalists have criticized it heavily, highlighting the dangers.

"For far too long, the Gulf has been treated as a sacrifice zone by polluters," Athan Manuel, director of the Sierra Club’s lands protection program, told the Chronicle.

"They've drilled in their waters, spilled recklessly and burned fossil fuels and chemicals in their communities. Now, in the wake of the biggest offshore oil spill disaster since Deepwater Horizon, Donald Trump and Ryan Zinke are pulling out all the stops to expose even more of the Gulf to the threats of drilling."

Vincent DeVito, Counselor for Energy Policy at Interior said that American energy production could remain safe and environmentally sound, however.

“People need jobs, the Gulf Coast states need revenue and Americans do not want to be dependent on foreign oil. We have heard their message loud and clear.”

   

Tagged categories: Department of the Interior; Government; NA; North America; Offshore; Oil and Gas; President Trump; Program/Project Management

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