Earlier this month, the Bureau of Ocean Energy Management (BOEM) announced that in March, the U.S. federal government will hold a lease sale to offer up more than 40 million acres in the Gulf of Mexico (GoM) for oil and gas exploration. All together, the sale will cover 7,600 blocks ranging anywhere from three to 230 nautical miles offshore and at depths ranging from 9,000 to 11,000 feet.
Four and a half years after the Deepwater Horizon incident, drilling activity in the Gulf is finally ramping back up, and with a large number of producers looking to take advantage of promising oil reserves, bidding is expected to be highly competitive. This past March, bids for similar tracts offered in the central GoM exceeded $850 million. A year before that they were as high as $1.2 billion.
Early estimates indicate that production resulting from the lease sale could total anywhere from 460 to 894 million barrels of oil and 1.9 to 3.9 trillion cubic feet of natural gas.
Federal officials say that the terms of individual leases will include provisions that encourage diligent oilfield development and ensure adequate protection of human, marine and coastal environments, all the while providing a fair return to taxpayers.
The sale in March will be the seventh under the Obama administration’s all-of-the-above program, which began in 2012 and is set to conclude in 2017. The previous six included the sale of roughly 60 million acres in the GoM and netted approximately $2.4 billion for American taxpayers.