BOEM offers first lease sale under Trump administration

March 7, 2017
The US Department of Interior, under newly appointed Secretary of the Interior Ryan Zinke, will offer 73 million acres offshore Texas, Louisiana, Mississippi, Alabama, and Florida for oil and gas exploration and development.

Offshore staff

WASHINGTON, D.C. – The US Department of Interior, under newly appointed Secretary of the Interior Ryan Zinke, will offer 73 million acres offshore Texas, Louisiana, Mississippi, Alabama, and Florida for oil and gas exploration and development. 

The proposed region-wide lease sale scheduled for Aug. 16, 2017, would include all available unleased areas in federal waters of theGulf of Mexico.

“Opening more federal lands and waters to oil and gas drilling is a pillar of President Trump’s plan to make the United States energy independent,” Zinke said. “The Gulf is a vital part of that strategy to spur economic opportunities for industry, states, and local communities, to create jobs and home-grown energy and to reduce our dependence on foreign oil.”

Proposed Lease Sale 249, scheduled to be livestreamed from New Orleans, will be the first offshore sale under the new Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2017-2022 (Five-Year Program). Under this new program, 10 region-wide lease sales are scheduled for the GoM. Two will be held each year and include all available blocks in the combined Western, Central, and Eastern Gulf of Mexico planning areas.

The DoI estimates the amount of resources projected to be developed as a result of the proposed region-wide lease sale ranges from 0.211 to 1.118 Bbbl of oil and from 0.547 to 4.424 tcf of gas. The sale could potentially result in 1.2 to 4.2% of the forecasted cumulative OCS oil and gas activity in the Gulf of Mexico. Most of the activity (up to 83% of future production) of the proposed lease sale is expected to occur in the Central Planning Area.

Lease Sale 249 will include about 13,725 unleased blocks, located from 3 to 230 mi (5 to 370 km) offshore, in the Gulf’s Western, Central, and Eastern planning areas in water depths ranging from 9 to more than 11,115 ft (3 to 3,400 m). Excluded from the lease sale are blocks subject to the Congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006; blocks that are 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 boundary of the Flower Garden Banks National Marine Sanctuary.

Walter Cruickshank, the acting director of the DoI’sBureau of Ocean Energy Management, said: “To promote responsible domestic energy production, the proposed terms of this sale have been carefully developed through extensive environmental analysis, public comment, and consideration of the best scientific information available. This will ensure both orderly resource development and protection of the environment.” 

The lease sale terms 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’s proposed economic terms include a range of incentives to encourage diligent development and ensure a fair return to taxpayers. The terms and conditions for Sale 249 in the Proposed Notice of Sale are not final. Different terms and conditions may be employed in the Final Notice of Sale, which will be published at least 30 days before the sale.

BOEM estimates that the US OCS contains about 90 Bbbl of undiscovered technically recoverable oil and 327 tcf of undiscovered technically recoverable gas. The GoM OCS, covering about 160 million acres, has technically recoverable resources of 48.46 Bbbl of oil and 141.76 tcf of gas.

According to the DoI, production from all OCS leases provided 550 MMbbl of oil and 1.25 tcf of natural gas in FY 2016, accounting for 72% of the oil and 27% of the natural gas produced on federal lands. Energy production and development of new projects on the US OCS supported an estimated 492,000 direct, indirect, and induced jobs in FY 2015 and generated $5.1 billion in total revenue that was distributed to the Federal Treasury, state governments, Land and Water Conservation Fund, and Historic Preservation Fund.

As of March 1, about 16.9 million acres on the US OCS are under lease for oil and gas development (3,194 active leases) and 4.6 million of those acres (929 leases) are producing oil and natural gas. More than 97% of these leases are in the Gulf of Mexico; about 3% are on the OCS off California and Alaska.

The current Five-Year Program [2012-2017] has one final Gulf lease sale scheduled on March 22, 2017 forCentral Planning Area Sale 247. The 2012-2017 Five-Year Program has offered about 73 million acres, netted more than $3 billion in high bids for American taxpayers and awarded more than 2,000 leases.