In a step towards fulfilling the Five-Year National Outer Continental Shelf (OCS) Oil and Gas Leasing Program, U.S. Secretary of the Interior Ryan Zinke made known on July 13th the availability of 75.9 million acres in the Gulf of Mexico for lease for the purpose of oil and gas exploration. The acreage lies off the coast of Texas, Louisiana, Mississippi, Alabama, and Florida.
The sale will be held on August 16, 2017, and will include a reduced royalty rate for shallow water leases in order to encourage oil and gas exploration during the current low commodity price environment.
Any leases that are in less than 200 meters of water are subject to a 12.5% royalty rate and those in depths greater than 200 meters of water are subject to an 18.75% royalty rate. The reduced rate is reflective of the program’s intent to encourage development, in the low commodity price environment.
Lease Sale 249 will be held in New Orleans and is the first offshore sale of the OCS Oil and Gas Leasing Program. The Program will include ten region-wide sales for the Gulf of Mexico alone—with two sales held per year—in the Western, Central and Eastern blocks.
The remaining nine lease sales are scheduled for 2018 to 2022, and all but one of them will be focused on the Gulf of Mexico. The remaining one—Lease Sale 258—is scheduled for 2021 and includes lease sales in the Cook Inlet, in Alaska.
Source: Bureau of Ocean Energy Management
Lease Sale 249 will include the sale of 14,220 un-leased blocks. The acreage exists in a range of three to 231 miles offshore, in water depths from nine to 11,115 feet.
Secretary Zinke noted that “our Outer Continental Shelf lands offer vast energy development opportunities,” and that tapping them would help, “maintain the nation’s global dominance in energy production.”
The Gulf of Mexico Energy Security Act of 2006 installed a moratorium on exploration and leasing in some blocks of the Gulf, and blocks outside of the U.S Exclusive Economic Zone, and part of the Flower Garden Banks National Marine Sanctuary are also off limits to the lease program.
Source: Bureau of Ocean Energy Management
Source: Bureau of Ocean Energy Management
As it stands, 15.6 million acres are currently under lease—comprised of 2,947 active leases. Of those 15.6 million acres, 4.1 million are producing oil or natural gas. The majority of the leases, 97%, are in the Gulf of Mexico—with the remaining 3% off the coast of California or Alaska.
