Taking the latest step in President Obama's efforts to continue to expand safe and responsible domestic energy production, the Department of the Interior today held a nearly 39 million-acre oil and gas lease sale for the Central Gulf of Mexico that drew $1,214,675,536 in high bids for tracts on the U.S. Outer Continental Shelf offshore Louisiana, Mississippi and Alabama. A total of 52 offshore energy companies submitted 407 bids on 320 tracts, covering more than 1,722,191.42 acres. The sum of all bids received totaled $1,595,397,446.
"Today's sale reflects strong, continuing industry interest in the Gulf of Mexico," said Secretary Salazar, who opened this morning's sale. "Developing public energy resources in the Gulf of Mexico is good for the Gulf's economy, and reflects President Obama's commitment to expand oil and natural gas production safely and responsibly, reducing our dependence on foreign oil, and supporting American energy jobs."
As part of the Obama Administration's all-of-the-above energy strategy, domestic oil and gas production has grown each year the President has been in office, with domestic oil production currently higher than any time in two decades and natural gas production at its highest level ever. Renewable electricity generation from wind, solar, and geothermal sources has doubled and foreign oil imports now account for less than 40 percent of the oil consumed in America -- the lowest level since 1988.
Lease Sale 227, conducted by Interior's Bureau of Ocean Energy Management (BOEM), included 7,299 blocks, covering about 38.6 million acres, located from three to about 230 nautical miles offshore, in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters). BOEM estimates the areas available for sale could result in the production of up to 890 million barrels of oil, and 3.9 trillion cubic feet of natural gas.
The sale builds on a number of recent offshore lease sales, including a November 2012 sale that made more than 20 million acres available, and a sale last June that made more than 39 million acres available. The Administration's Outer Continental Shelf Oil and Gas Leasing Program for 2012--2017 (Five Year Program) makes available for exploration and development all offshore areas with the highest conventional resource potential, including areas that are estimated to hold more than 75 percent of the nation's undiscovered, technically recoverable offshore oil and gas resources. Today's sale is the second under the new Five Year Program, and the first of its five scheduled Central Gulf of Mexico lease sales.
"The Central Gulf of Mexico is one of the cornerstones of the United States' domestic energy portfolio, and is central to meeting the Nation's energy needs and fueling the economy," said Acting Assistant Secretary for Land and Minerals Management and BOEM Director Tommy P. Beaudreau. "BOEM is committed to promoting safe and responsible development of the Nation's offshore energy resources, while safeguarding marine and coastal environments."
BOEM established the terms for today's sale after extensive environmental analysis, public comment and consideration of the best scientific information available. These terms include measures to protect the environment, such as stipulations requiring that operators protect biologically sensitive features and provide trained observers to monitor marine mammals and sea turtles to ensure compliance and restrict operations when conditions warrant. These terms will help ensure an appropriate balance of responsible resource development with protection of the human, marine and coastal environments.
The terms also continue a range of incentives to encourage diligent development and ensure a fair return to taxpayers -- including an increased minimum bid for deepwater tracts, 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 increased its minimum bid requirement in deepwater to $100 per acre, up from $37.50 in previous Central lease sales. Rigorous historical analysis showed that leases that received high bids of less than $100 per acre have experienced virtually no exploration and development activities.
Each high bid on a tract will now go through a strict evaluation process within BOEM to ensure the public receives fair market value before a lease is awarded.
Sale statistics for Central Sale 227 will be available at www.boem.gov/sale-227