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US Department of Interior announces results of Gulf of Mexico region-wide oil and gas lease

US Deputy Secretary of the Interior David Bernhardt announced on 15 August that region-wide Gulf of Mexico Lease Sale 251 generated $178,069,406 in high bids for 144 tracts covering 801,288 acres in federal waters of the Gulf of Mexico. A total of 29 companies participated in the lease sale, submitting $202,667,923 in bids.

“Today’s lease sale is yet another step our nation has taken to achieve economic security and energy dominance,” Mr Bernhardt said. “The results from the lease sale will help secure well-paying offshore jobs for rig and platform workers, support staff onshore, and related industry jobs, while generating much-needed revenue to fund everything from conservation to infrastructure.”

Lease Sale 251, livestreamed from New Orleans, was the third offshore sale held under the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program. Under this program, 10 region-wide lease sales are scheduled for the Gulf, where resource potential and industry interest are high and oil and gas infrastructure is well established.

Two Gulf lease sales will be held each year and include all available blocks in the combined Western, Central and Eastern Gulf of Mexico Planning Areas.

“The Gulf of Mexico is a long established oil and gas province, and many of the blocks offered at today’s sale have been offered many times before,” Principal Deputy Assistant Secretary Kate MacGregor said. “Today’s results demonstrate a steady interest as serious innovation and engineering continues to unlock new energy resources deep below the seabed.”

In January, Secretary of the Interior Ryan Zinke announced a draft proposed program for a new National OCS Program for years 2019-2024. The 60-day public comment period for the draft ended on 9 March. After considering all public comments received in response, the Bureau of Ocean Energy Management will develop and publish a proposed program for public comment later this year, followed by the proposed final program expected in 2019.

BOEM will continue to implement the 2017-2022 OCS Program until the new National OCS Program is approved. Lease Sale 251 included 14,622 unleased blocks, located from three to 231 miles offshore, in the Gulf’s Western, Central and Eastern Planning Areas in water depths ranging from 9,000 ft to more than 11,115 ft.

Excluded from the lease sale are: (1) blocks subject to the congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006; (2) blocks that are adjacent to or beyond the US Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap; and (3) whole blocks and partial blocks within the boundaries of the Flower Garden Banks National Marine Sanctuary.

“BOEM continues to advance responsible offshore energy development, while protecting the environment,” Acting BOEM Director Walter Cruickshank said. “This lease sale represents another step forward in the Administration’s comprehensive effort to secure our Nation’s energy future.”

Revenues received from OCS leases – including high bids, rental payments and royalty payments – are directed to the US Treasury, the governments of Texas, Louisiana, Mississippi, and Alabama, the Land and Water Conservation Fund and Historic Preservation Fund.

Leases resulting from this sale will 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.

In addition, BOEM has included appropriate fiscal terms that take into account market conditions and ensure taxpayers receive a fair return for use of the OCS. In recognition of current hydrocarbon price conditions and the marginal nature of remaining Gulf of Mexico shallow-water resources, these terms include a 12.5% royalty rate for leases in less than 200 meters of water depth, and a royalty rate of 18.75% for all other leases issued under the sale

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