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Interior department to hold big gulf oil lease sale

August 19, 2011 |  2:50 pm

Oil worker gulf of mexico

The Obama administration announced Friday that it will hold its first oil and gas lease sale in the Gulf of Mexico since the deadly Deepwater Horizon explosion and oil spill.

“This sale is an important step toward a secure energy future that includes safe, environmentally sound development of our domestic energy resources,” said Interior Secretary Ken Salazar. “Since Deepwater Horizon, we have strengthened oversight at every stage of the oil and gas development process, including deepwater drilling safety, subsea blowout containment, and spill response capability."

The Department of Interior plans in December to offer more than 20 million acres in the western gulf for energy leasing -- despite a recent Interior report that found companies are not exploring or producing oil and gas on roughly two-thirds of the 34 million acres they already lease in the gulf.

The administration came under sharp criticism from the oil industry and gulf state politicians for imposing a deep-water drilling moratorium in the wake of last year's Deepwater explosion -- and then when the ban was lifted -- for not approving new drilling quickly enough.

“This lease sale is an important and encouraging step toward getting the Gulf of Mexico and its hardworking people back to work. Unfortunately, the slow pace of new permits in the gulf places lingering uncertainty over this critical industry," Louisiana Sen. Mary Landrieu, a Democrat, said in a statement.

The conservation group Oceana condemned the move as premature. “Rushing this lease sale in the western gulf puts animals like turtles, dolphins and bluefin tuna at risk," said senior campaign director Jacqueline Savitz. "The Obama administration still hasn’t addressed significant shortcomings in spill response and cleanup capabilities."

The Environmental Defense Fund was more positive. “This announcement proves that the Obama administration is serious about allowing oil companies to return to deep-water drilling in the gulf, as long as they follow essential new rules ... to  protect the environment, workers and the economy," said Elgie Holstein, the group's senior planning director and former chief of staff at the U.S. Department of Energy. 

The new lease areas are located from nine to about 250 miles offshore in shallow and deep water, and could, the Interior said, produce 222 million to 423 million barrels of oil and as much as 2.65 trillion cubic feet of natural gas.

Acknowledging that many existing leases are sitting idle, the agency said it intends to increase the minimum bid amount for deep-water blocks to $100 per acre from $37.50 to "discourage companies from purchasing leases they are unlikely to explore in the near term." 

The sale will include environmental safeguards for marine life and, "when conditions warrant," monitoring by trained observers to ensure compliance, the department said.

An Interior analysis released this spring found that gulf lease auctions before the BP spill drew little interest. Of nearly 53 million acres offered in 2009 in the central and western gulf, only 2.7 million acres were leased. Last year, only 2.4 million acres were leased out of roughly 37 million acres offered.

-- Bettina Boxall

Photo: An oil worker in the Gulf of Mexico. Credit: Carolyn Cole / Los Angeles Times

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