BLBG:Oil-Lease Minimum Price Doubled by U.S. in Gulf Plan
The U.S. will more than double the minimum bid on oil leases in the western Gulf of Mexico to take advantage of pent-up demand as the administration seeks to reduce the federal budget deficit.
The Obama administration will offer the leases on Dec. 14, in the first auction of Gulf leases since the BP Plc (BP/) oil spill last year, the Bureau of Ocean Energy Management, Regulation and Enforcement said today in a statement.
“Having a firm date now gives a greater assurance that the sale will indeed take place,” Randall Luthi, president of the National Ocean Industries Association in Washington, said in an e-mail. “This sale marks a key step toward restoring American jobs.”
The Interior Department proposes to increase the minimum bid to $100 per acre from $37.50 for blocks in waters deeper than 1,312 feet (400 meters). Leases with bids less than $100 had little or no exploration or development, the agency said, citing a review of 15 years of auction results.
“It’s an increase, but I don’t think it will discourage exploration,” Don Briggs, president of the Louisiana Oil and Gas Association in Baton Rouge, said in an interview. “This is another way to gather additional revenues to cover some of the increased costs they have, all the new inspectors and all the new costs they created.”
Added Inspections
The agency introduced requirements for more inspections and equipment for blowout prevention and spill containment, and added staff to oversee the industry, after the explosion of the Deepwater Horizon rig leased by BP in April 2010 killed 11 people and spewed crude for 87 days.
The U.S. will seek bidders for all available unleased areas in the Western Gulf off the Texas coast, in depths from 16 feet to more than 10,975 feet. Oil companies may be able to produce 222 million to 423 million barrels of oil from reservoirs in the area, according to the statement.
BP, based in London, is the top leaseholder in the Gulf, followed by San Ramon, California-based Chevron Corp. (CVX), Irving, Texas-based Exxon Mobil Corp. (XOM) and Royal Dutch Shell Plc (RDSA) of The Hague.
To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net
To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net
