BOEM Plans Biggest GOM Lease Sale Ever

BOEM Plans Biggest GOM Lease Sale Ever
BOEM proposes lease sale for nearly 77 million acres in Gulf of Mexico.

The U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) on Tuesday proposed what it claims is the largest oil and gas lease sale ever held in the United States.

“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,” Interior Secretary Ryan Zinke said in a written 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 the BOEM website, the unit of the Interior Department anticipates livestreaming the results of Proposed Lease Sale 250 from New Orleans on March 21, 2018. BOEM will solicit bids on 76,967,935 acres in federal waters offshore Texas, Louisiana, Mississippi, Alabama and Florida – an area roughly the size of New Mexico. According to the Interior Department, the amount of acreage up for lease includes all available unleased areas on the Gulf of Mexico Outer Continental Shelf (OCS).

The Interior Department noted the proposed lease sale is the second offshore sale under the National Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022. The previous region-wide sale, Lease Sale 249 in August 2016, garnered $121 million in high bids and encompassed an area approximately 1 million acres smaller than the pending sale, the department stated. A GOM lease sale from March of this year generated more than $315 million in bids for nearly 914,000 acres.

High bids, rental payments and royalty payments on any future production from these leases go to the Interior Department, BOEM stated. OCS lease revenues benefit the U.S. Treasury, Gulf Coast states, the Land and Water Conservation Fund and Historic Preservation Fund, the agency added.

Randall Luthi, president of the National Ocean Industries Association (NOIA), said the largest-ever GOM oil and gas lease sale provides the latest evidence that the Trump administration is keeping its promise to pursue an “all of the above” energy policy leading to U.S. energy dominance.

“The historic size of lease offerings in Proposed Lease Sale 250 presents an unprecedented opportunity for the industry to safely produce reliable and affordable oil and natural gas for American consumers, bolster the U.S. economy and increase domestic energy security,” said Luthi.

Calling offshore lease sales “an integral part of a good national policy to provide energy sustainability,” the NOIA executive nevertheless added that more is needed for the U.S. to become energy-dominant.

“In addition, we look forward to working with the Secretary in developing a royalty policy that benefits the U.S. government and those who actually do the work of exploration and development,” said Luthi. “Finally, we support efforts to continue to winnow out the regulations that are there for regulation’s sake and not to promote and preserve safe development of the OCS.”

An industry source told Rigzone that the lease sale “itself is not really a significant departure from the status quo” because the Interior Department continues to offer GOM lease sales twice a year.

“The new twist is that all available leases in the Western and Central Gulf will be made available rather than offering Central leases in the spring and Western leases in the fall,” the source, who spoke on background, said. “This new approach was proposed and offered up by (the) previous administration. The idea is to make the process more efficient.”

Noting that the new concept looks “on paper” like it should work, “time will tell how effective it is in improving efficiency,” the industry source added.

BOEM has posted additional information about Proposed Lease Sale 250 on its website.


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Gene Riddle  |  October 25, 2017
This would be good news except that the combination of low oil prices and high expense of compliance with new regulations makes most GoM exploration/appraisal/development opportunities too high risk to venture a competitive bid on available leases. Until the oil economy recovers and/or restrictive and expensive regulations are eased, I do not anticipate an uptick in GoM exploration activity.