Analysis may delay Gulf oil lease sale

By Jennifer A. Dlouhy, Houston Chronicle

WASHINGTON — The future of a planned March sale of offshore drilling leases in the Gulf of Mexico is in doubt because of the federal government’s plans to first conduct a lengthy environmental study of the region.

The environmental analysis — formally announced this week — is expected to take about six months, so it probably won’t be finished before March.

Although the Bureau of Ocean Energy Management, Regulation and Enforcement has not announced any delay in the lease sale covering offshore tracts in the central Gulf of Mexico, oil industry lobbyists and analysts said it is unlikely to go forward.

Analysts at the investment bank FBR Capital Markets said the March lease sale will probably be canceled because of the study and because of the bureau’s work vetting new drilling permits and drafting new safety rules.

“The agency faces significant workload on other offshore regulation, including permitting and public comment period requirements,” the analysts said.

Mike Olsen, a lawyer with the Houston-based Bracewell & Giuliani firm who previously spent five years working for the Interior Department, said such studies typically take several months, and it would be difficult to get one done by March.

The government’s environmental impact study is designed to assess the potential impact of drilling in the Gulf of Mexico in light of the Macondo deep-water well blowout and oil spill earlier this year. The last similar study was conducted long before the April 20 blowout that destroyed the Deepwater Horizon drilling rig and killed 11 workers.

“This is a vehicle for BOEMRE, other government scientists and the public to gather and consider new information obtained and analyzed as a result of the Deepwater Horizon blowout and spill,” said Michael Bromwich, the bureau director.

Helps decision-makers

He said the fresh assessment will allow his agency “to make objective, science-based decisions about the activities involved in offshore energy exploration, development and production.”

Under the government’s current five-year plan for drilling on the outer continental shelf — which runs through June 30, 2012 — the ocean energy bureau was slated to conduct three more sales in the Gulf of Mexico, beginning with the one in March and followed by sales in the Western Gulf of Mexico later in 2011 and in the Central Gulf in early 2012.

Bromwich said in an interview Tuesday that an upcoming “filing” would shed light on the future of the sales. It was unclear when — or what — that would be.

But the government may have tipped its hand with its formal announcement of the environmental impact study, which lays the groundwork for the upcoming sales.

The notice published in the government’s Federal Register on Wednesday specifically named two of the remaining three sales — and omitted the one planned for March. To analysts and industry advocates in Washington, that signaled the March sale is off.

Notice revised

The government swiftly revised that notice, and the announcement published a day later did not specifically name any lease sales.

Olsen said the revision gives the government more flexibility and preserves the appearance, at least, that the March sale is still on track.


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