Strong offshore lease sale, reasonable drilling plan

As we enter prime time for the presidential campaign, you will hear charges from both sides about all sorts of issues. A big one you probably have heard repeatedly is that the Obama administration is not doing enough to tap into our offshore oil and gas reserves.

Well, if you look closely at two developments in June that charge just doesn’t hold water.

First, the Central Gulf of Mexico lease sale held in New Orleans on June 20 attracted a whopping $1.7 billion in high bids on over 2.4 million acres. (That followed the Western Gulf of Mexico lease sale held in December that offered 21 million acres for lease.)

Then the Obama administration announced its latest drilling plan a week later.

In the new plan, eight oil and gas lease sales are scheduled for the Central and Western Gulf of Mexico over the next five years. The Proposed Final Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2012-2017 includes 15 potential lease sales — 12 in the Gulf of Mexico and three off the coast of Alaska. Yes, frontier areas in the Alaska Arctic — the Chukchi Sea and the Beaufort Sea Planning Area — are included. Also included is a Cook Inlet Planning Area lease sale.

The Central Gulf Outer Continental Shelf Lease Sale was indeed a big success. The $1.7 billion in high bids, with over $2.6 billion from oil and gas companies exposed, topped the last Central Gulf OCS sale held just before the Macondo blowout in 2010 when operators spent $949 million, exposing $1.3 billion.

Except for the justified offshore drilling moratorium after that “minor” little blowout and spill in the Gulf over two years ago, you can now argue that the Obama administration has returned to its pre-Macondo “all-of-the-above energy strategy” to expand domestic energy production.

I know it is election season, but calling the new proposed leasing program a “giant step backward for American offshore energy production” seems a little ridiculous. We can thank U.S. Rep. Doc Hastings of Washington, the chairman of the House Natural Resources Committee, for that one. Then again, Hastings has proposed a bill that would “replace President Obama’s energy-restricting and job-limiting offshore drilling plan” with one that would allow drilling off the coasts of several states including Oregon, Washington and, yes, even Maine!

If you have been reading WorkBoat the past few months, you know that day rates have been increasing for rigs and large OSVs in the Gulf with more companies planning to build new rigs and boats to meet anticipated future demand in deepwater. Heck, with some operators shifting more exploration dollars to the liquids-rich and oil prospects on the shelf due to low natural gas prices, smaller boats and jackups should benefit too.

So put on your election-time rumbling blinders and continue to enjoy an improving business climate offshore.

 

About the author

David Krapf

David Krapf has been editor of WorkBoat, the nation’s leading trade magazine for the inland and coastal waterways industry, since 1999. He is responsible for overseeing the editorial direction of the publication. Krapf has been in the publishing industry since 1987, beginning as a reporter and editor with daily and weekly newspapers in the Houston area. He also was the editor of a transportation industry daily in New Orleans before joining WorkBoat as a contributing editor in 1992. He has been covering the transportation industry since 1989, and has a degree in business administration from the State University of New York at Oswego, and also studied journalism at the University of Houston.

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