Gulf lease sale draws interest, opinions

The second offshore lease sale since 2010, that opened 39 million acres in the Gulf of Mexico to petroleum exploration, with the sum of all bids received exceeding $2.6 billion, drew mixed reactions last Wednesday at the Superdome in New Orleans.

A total of 56 offshore energy companies submitted 593 bids for 454 tracts covering more than 2.4 million acres on the outer continental shelf along Louisiana, Mississippi and Alabama.

Offshore areas where leases were let include both East and West Cameron, Timbalier, Vermillion, Marsh Island, Eugene Island, Ship Shoal, Pelto, Grand Isle, West Delta, South Pass, Main Pass, Chandeleur, Mobile, Viosca Knoll, Ewing Bank, Mississippi Canyon, De Soto Canyon, Garden Banks, Green Canyon, Atwater Valley, Lloyd Ridge, Keathley Canyon, Walker Ridge, Lund and Sigsbee Escarpment.

The highest tract bid was submitted by Statoil Gulf of Mexico and was in excess of $157 million for a block of Mississippi Canyon.

Shell Oil submitted the highest total amount of bonus bids for 24 tracts at more than $406 million.

The sale was administered by the U.S. Department of Interior and drew enthusiastic participation from oil producers.

“It was clear to everyone here today that there is tremendous interest in the Central Gulf lease sale,” Gulf Economic Survival Team Executive Director Lori LeBlanc said. “The strong demand for the offshore tracts offered today should remind all Americans, including members of the [Obama] Administration, of the Gulf’s vast potential to serve our country’s energy needs for the future.”

“We are excited with the results of the lease sale,” Apache Deepwater LLC Regional Vice President Cory Loegering said. “Of course, the lease is only the first step in a process that requires regulatory approvals. However, we are optimistic, in part because of the great work of state officials and the combined efforts of the Gulf business community.”

During the previous four years, Gulf of Mexico lease sales revenue for the federal government had diminished from $10 billion in 2008 to zero in 2011. It is a factor that some elected officials claim has not helped the national economy and is reflective of an anti-oil position from the White House.

“I certainly hope our efforts to knock some sense into the administration about the critical nature of energy production in the Gulf of Mexico are starting to pay off,” Sen. David Vitter (R-La.) said. “But until we see a positive trend with lease sales and issuing drilling permits, no one should be remotely convinced that Washington’s off-course energy policy is on the right track.”

“This sale, part of the President’s all-of-the-above energy strategy, is good news for American jobs, good news for the Gulf economy, and will bring additional domestic resources to market,” Secretary of Interior Ken Salazar said in a prepared statement. “When it comes to domestic production, the President has made clear he is committed to expanding oil and natural gas production safety and responsibility, and today’s sale is just the latest example of his administration delivering on that commitment.”

U.S. House of Representatives Natural Resources Committee Chairman Rep. Doc Hastings (R-Wash.) said that this lease sale does not make up for past restrictions to offshore activity. The congressman noted that since taking office, President Obama has either cancelled or delayed 10 of 15 scheduled lease sales since taking office.

“The Obama Administration is setting records for delays and cancellations when it comes to offshore energy production,” Hastings said. “While the Obama Administration has now cancelled and delayed more lease sales than they have held, that is not stopping them from patting themselves on the back for holding a lease sale that was originally scheduled by the previous Administration.”

“Despite continuing bottlenecks in terms of extended periods for plans, limited permits for unique wells designated to each hydrocarbons and an overall lack of predictability concerning permits for future operations, companies continue to bet on the vast potential of the Gulf,” LeBlanc said.