Energy Partners, Ltd., a U.S. based oil and gas exploration and production company announced was the high bidder on six leases at the Central Gulf of Mexico Lease Sale 216/222 held yesterday in New Orleans, Louisiana.
The six high bid lease blocks cover a total of 27,148 acres on a net and gross basis and are all located in the shallow Gulf of Mexico Shelf within the Company’s core area of operations. EPL’s share of the high bids totals $7.0 million.
Gary C. Hanna, EPL’s President and Chief Executive Officer commented, “This lease sale was a long awaited one, and we are pleased that we were successful with high bids within our core areas and targeted region. Consistent with our acquisition and organic growth strategy, the leases contain oily prospects that enhance our existing portfolio and were identified with the aid of our regional study that kicked off earlier this year. The six leases include three leases within the Main Pass area, two within the West Delta area, and one adjacent to our South Timbalier 41 field.”
The Central Gulf of Mexico oil and gas lease sale attracted $1,704,500,995 in high bids for tracts on the U.S. outer continental shelf offshore Louisiana, Mississippi and Alabama. Yesterday’s highest bid on a tract was $157,111,000 submitted by Statoil Gulf of Mexico LLC for Mississippi Canyon, Block 718.
Secretary of the Interior Ken Salazar said that the sale, was good news for American jobs, good news for the Gulf economy, and would bring additional domestic resources to market.
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Yesterday, the Department of the Interior took the latest step as part of President Obama’s all-of-the-above energy strategy to expand safe and responsible domestic energy production, holding a 39 million acre lease sale in the Gulf of Mexico.
Secretary of the Interior Ken Salazar announced that the Central Gulf of Mexico oil and gas lease sale attracted $1,704,500,995 in high bids for tracts on the U.S. outer continental shelf offshore Louisiana, Mississippi and Alabama. A total of 56 offshore energy companies submitted 593 bids on 454 tracts covering more than 2,402,918 acres. The sum of all bids received totaled $2,602,563,726.
The lease sale builds on a series of actions taken by the Obama administration, including additional lease sales for both onshore and offshore areas for oil and gas development, to meet the President’s direction to continue to expand safe and responsible production of America’s important domestic resources.
“This sale, part of the President’s all-of-the-above energy strategy, is good news for American jobs, good news for the Gulf economy, and will bring additional domestic resources to market,” said Salazar, who opened the sale. “When it comes to domestic production, the President has made clear he is committed to expanding oil and natural gas production safely and responsibly, and today’s sale is just the latest example of his administration delivering on that commitment. The numbers speak for themselves: every year the President has been in office, domestic oil and gas production has increased, foreign imports of oil have decreased, and we are currently producing more oil than any time in the past eight years.”
The Central Gulf of Mexico Lease Sale 216/222, conducted by the Bureau of Ocean Energy Management (BOEM), offered more than 39 million acres for oil and gas development on the U.S. Outer Continental Shelf. The acreage included 7,434 tracts from three to more than 230 miles off the coast, in depths ranging from 10 to more than 11,200 feet (3 to 3,400 meters). BOEM estimates the economically recoverable hydrocarbons that could be produced as a result of the acreage offered ranges from 0.8 to 1.6 billion barrels of oil and 3.3 to 6.6 trillion cubic feet of natural gas.
The sale builds on the successful Western Gulf of Mexico lease sale held by BOEM in December 2011 that made available more than 21 million acres – equal to an area the size of South Carolina – and attracted more than $337 million in high bids and included 20 companies submitting 241 bids on 191 tracts comprising over a million acres offshore Texas. In 2010, DOI offered nearly 37 million offshore acres to industry for oil and gas leasing.
“Before moving forward with Sale 216/222, we conducted a rigorous analysis of the environmental effects of the Deepwater Horizon oil spill on the Central Gulf of Mexico,” said BOEM Director Tommy P. Beaudreau. “We have also continued a number of lease terms designed to ensure fair return to the American people and provide innovative incentives to promote diligent development of our nation’s offshore oil and gas resources.”
Yesterday’s highest bid on a tract was $157,111,000 submitted by Statoil Gulf of Mexico LLC for Mississippi Canyon, Block 718. Shell submitted the highest total amount in bonus bids, $406,594,560 on 24 tracts.
Lease terms for both sales included escalating rental rates to encourage faster exploration and development of leases as well as shorter lease terms for shallower water in order to encourage timely development. BOEM has increased its minimum bid requirement in deepwater to $100 per acre, up from $37.50 in previous Central lease sales. Rigorous historical analysis showed that leases that received high bids of less than $100 per acre have experienced virtually no exploration and development activities.
Lessees will have to comply with a series of important environmental stipulations, including requirements to protect biologically sensitive features, as well as marine mammals and sea turtles, and employ trained observers to ensure compliance and restrict operations when conditions warrant. These terms will help ensure an appropriate balance of responsible resource development with protection of the human, marine and coastal environments.
Each high bid on a tract will now go through a strict evaluation process within BOEM to ensure the public receives fair market value before a lease is awarded. This is the final Gulf Lease Sale scheduled in the current Outer Continental Shelf Oil and Gas Leasing Program: 2007-2012.
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The Obama administration’s announcement that it may allow seismic studies potentially paving the way for offshore drilling along the East Coast is political posturing designed to distract voters concerned about high gasoline prices, oil industry leaders and Republican lawmakers said today.
The administration’s move “continues the president’s election-year political ploy of giving speeches and talking about drilling after having spent the first three years in office blocking, delaying and driving up the cost of producing energy in America,” said Rep. Doc Hastings, R-Wash. “The president is focused on trying to talk his way out of what he’s done, rather than taking real steps to boost American energy production.”
At issue is Interior Secretary Ken Salazar’s announcement in Norfolk, Va., this morning that the government is assessing the environmental effects of allowing seismic surveys along the mid- and south-Atlantic that could help locate hidden pockets of oil and gas. If ultimately approved, the studies by private geological research companies also could help guide decisions about where to place renewable energy projects off the coast.
The Interior Department is issuing a draft environmental impact statement that assesses the consequences of seismic research on marine life in the area. The Obama administration had planned to release a similar document in 2010, before the Gulf of Mexico oil spill.
If the draft environmental assessment is finalized after public comments and hearings, the Bureau of Ocean Energy Management could give companies permits to conduct the studies off the coasts of eight East Coast states.
Salazar said that if the geological research turned up promising results, that could open the door to offshore drilling in the area within five years, even though the administration currently has ruled out that kind of exploration before 2017. A government plan for selling offshore drilling leases from 2012 to 2017 does not include any auctions of Atlantic territory.
“If the information that is developed allows us to move forward in a quicker time frame, we can always come in with an amendment,” Salazar said. “We’re not prejudging that at this point in time. My view is … we need to develop information so we can make those wise decisions.”
Industry officials noted that under federal laws, it could take years for the government to revise the 2012-2017 leasing plan, even if federal officials decided to pursue Atlantic drilling.
Erik Milito, upstream director for the American Petroleum Institute, said the administration is repackaging old news and old plans to make it appear it is making real progress to encourage more domestic energy development.
“This is political rhetoric to make it appear the administration is doing something on gas prices, but in reality it is little more than an empty gesture,” Milito said.
Randall Luthi, the president of the National Ocean Industries Association, likened the administration’s announcement to giving the industry “a canoe with no oars, since there are no lease sales planned anywhere off the East Coast.”
If allowed to conduct seismic surveys, geological research firms would ultimately give the resulting information to the government and sell it to companies eager to analyze the data.
But Milito questioned whether seismic companies would pursue the work, given that some of their best customers — oil companies — wouldn’t be able to use it to plan offshore drilling for years, if at all.
“Without an Atlantic coast lease sale in their five-year plan, the administration’s wishful thinking on seismic research has no ultimate purpose,” Milito said. “The White House has banned lease sales in the Atlantic for at least the next five years, discouraging the investment and job creation, and ultimately production, which would make seismic exploration valuable.”
Still, at least six companies already have told the government they want to conduct seismic research along the East Coast.
“We have gotten significant expressions of interest from companies in contracting for these seismic surveys,” said Tommy Beaudreau, the director of the Bureau of Ocean Energy Management. “I am confident that, assuming the process continues on the track we anticipate, that there will be significant interest next year in conducting these surveys.”
Geological research uses seismic waves to map what lies underground or beneath the ocean floor. The shock waves — which some environmental advocates say may harm marine life — map the density of subterranean material and can gives clues about possible oil and gas.
Seismic studies also help identify geologic hazards and archaeological resources in the seabed — information useful in determining the placement of renewable energy infrastructure as well as oil and gas equipment.
The existing seismic surveys of the Atlantic coast are decades old, and in the years since, “there have been enormous technological advances,” Salazar noted.
“We do need to have seismic moving forward so we can really understand what the resource potential is,” Salazar added.
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