The sun is setting for drillers wanting a new piece of the Gulf. There’s one more day to bid on leases to drill offshore in the Gulf of Mexico.
The Department of the Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) will hold a sale of nearly 38 million acres of offshore leases Wednesday.
Those leases run in an area from three to 230 miles off the coast, the BOEMRE says, and range anywhere from nine feet to more than two miles deep. The bureau estimates that there’s somewhere around 31 billion barrels of oil and 134 trillion cubic feet of natural gas waiting there that are “currently undiscovered and technically recoverable.” (But they say the actual production would likely be much less, resulting in 1 billion barrels of oil and 4 trillion cubic feet of natural gas.)
The sale goes down Wednesday, June 20th at the Mercedez-Benz Superdome. But bids must be submitted by mail no later than Tuesday. The Department says that the minimum bid for deepwater leases is $100 per acre. Once the leases are sold, it will mark the end of the government’s 2007 – 2012 Outer Continental Shelf Oil and Natural Gas Leasing Program.
But with oil prices falling and projected to dive even further (one report today hints at the possibility of oil at $50 a barrel), those leases may not bring the returns drillers want.
And then there are the environmental concerns.
This week’s sale was delayed after the 2010 BP Oil spill disaster at the Deepwater Horizon rig. So what’s to say the same thing won’t happen again?
The Department of Interior says there are new requirements in place for the leases. In a statement earlier this year, the Department of Interior laid out some of the requirements for drillers wanting a piece of the Gulf:
“These 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 completed a supplemental environmental impact statement relating to this sale, which considers the latest available information for the Central Gulf of Mexico Planning Area following the Deepwater Horizon oil spill.”
As we reported in January, public opposition to the sales has been muted. At one public hearing in Houston, only six people showed up.
Another five-year lease program is in the works for 2012-2017, which the Department of Interior says will make 75 percent of the “undiscovered technically recoverable oil and gas” thought to be in the Outer Continental Shelf of the Gulf open to drilling.