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Region-wide oil and gas lease sale for Gulf of Mexico announced

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Oilfield Technology,

US Secretary of the Interior David Bernhardt has announced that the Bureau of Ocean Energy Management (BOEM) will offer over 78 million acres for a region-wide lease sale scheduled for 18 March 2020. The sale would include all available unleased areas in federal waters of the Gulf of Mexico.

“Record domestic offshore oil and gas production in 2019 has played a vital role in President Trump’s vision for American energy independence,” said Bernhardt. “A strong and safe offshore energy programme fuels the American economy, provides thousands of good paying jobs and delivers affordable and reliable energy for everyday use.”

Lease Sale 254, scheduled to be live streamed from New Orleans, Louisiana, will be the sixth offshore sale under the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program. Under this programme, a total of ten region-wide lease sales are scheduled for the Gulf, where resource potential and industry interest are high, and oil and gas infrastructure is well established. Two Gulf lease sales are scheduled to be held each year and include all available blocks in the combined Western, Central and Eastern Gulf of Mexico Planning Areas.

“The Gulf of Mexico continues to be one of the most productive basins in the world and is an essential part of our Nation’s domestic energy portfolio,” said Director of BOEM’s New Orleans office Mike Celata. “BOEM’s staff works hard to help ensure future development is done in a manner that addresses our nation's energy needs, while protecting marine life and the environment in which they live. I continue to be proud of the workers who make these sales happen.”

Excluded from the lease sale are:

  • Blocks subject to the congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006;
  • Blocks adjacent to or beyond the US Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap; and
  • Whole blocks and partial blocks within the current boundaries of the Flower Garden Banks National Marine Sanctuary.
  • The Gulf of Mexico OCS, covering about 160 million acres, is estimated to contain about 48 billion bbl of undiscovered, technically recoverable oil and 141 trillion ft3 of undiscovered, technically recoverable gas.

Revenues received from OCS leases (including high bids, rental payments and royalty payments) are directed to the US Treasury, certain Gulf Coast states (Texas, Louisiana, Mississippi, Alabama), the Land and Water Conservation Fund and the Historic Preservation Fund.

Leases resulting from this sale would 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.

BOEM has also included fiscal terms that take into account market conditions and ensure taxpayers receive fair market value for use of the OCS. Terms include a 12.5% royalty rate for leases in less than 200 m of water depth, in recognition of current hydrocarbon price conditions and the marginal nature of remaining Gulf of Mexico shallow water resources and a royalty rate of 18.75% for all other leases issued pursuant to the sale.

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