June lease sale anticipated; producers contend a little not enough

The U.S. Department of Interior announced Thursday that it will put up more than 7,000 shallow and deepwater oil and natural gas blocks in the Gulf of Mexico for auction on June 20.

According to the Department of Interior the sale will include 38 million acres that could produce one billion barrels of oil and four trillion cubic feet of natural gas.

“While we are glad to see the Department of Interior move forward with this long-awaited sale, it is important to place the [Obama] Administration’s activity with regard to offshore oil and gas development in perspective,” Gulf Coast Survival Team director Lori LeBlanc said.

LeBlanc noted that regardless of the government’s announcement, that suggested that exploration and production are being encouraged by the White House, lease sale activity has been on a continual decline since 2009.

“During 2008, for example, $9.4 billion was generated in new offshore lease bids,” LeBlanc said. “That figure has shrunk noticeably each year of this administration.”

In 2009, offshore lease revenue was posted at $1.1 billion. That dropped to $979 million in 2010, due in part to reaction following the BP Deepwater Horizon disaster. Levels plunged to $36 million in 2011 when only one lease was put out for the entire year.

“Expanding offshore oil and gas production is a key component of our comprehensive energy strategy to grow America’s energy economy, and will help us continue to reduce our dependence on foreign oil and create jobs here at home,” Secretary of the Interior Ken Salazar said in a prepared statement. “The President has made it clear that developing our domestic oil and gas resources is a significant part of this administration’s efforts to grow our economy and create jobs. This lease sale is part of our commitment to safe and responsible development of the outer continental shelf.”

LeBlanc contends that Salazar’s statement does not fit the facts. “It’s hard to believe that an administration claiming to be focused on increased U.S. energy independence and on finding ways to balance the budget and reduce the federal deficit has largely failed so far to advance these goals by fostering more robust activity in the Gulf. We hope the June lease does in fact occur as scheduled and, more importantly, is a sign of more active commitment by the Administration to fulfill the energy and fiscal needs of Americans going forward.”

The lease sale will to take place at the Mercedes Benz Dome in New Orleans. Minimum bids are $100 per acre.