Gulf of Mexico lease sale set for November

The Bureau of Ocean Energy Management (BOEM) announced today that it proposes to offer approximately 78.8 million acres for a regionwide lease sale scheduled for November 2020.

Lease Sale 256, scheduled to be livestreamed from New Orleans, will be the seventh offshore sale under the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program. Lease Sale 256 will include approximately 14,755 unleased blocks — all of the available unleased areas in federal waters of the Gulf of Mexico.

“The Gulf of Mexico provides a fundamental role for our nation’s energy portfolio,” said Mike Celata, director of BOEM’s Gulf of Mexico Region. “As one of the most productive basins in the world, the development of its resources is essential to our nation’s energy security.”

The Gulf of Mexico Outer Continental Shelf (OCS), covering about 160 million acres, is estimated to contain about 48 billion bbls. of undiscovered technically recoverable oil and 141 trillion cubic feet of undiscovered technically recoverable gas.

Revenues received from OCS leases (including high bids, rental payments and royalty payments) are directed to the U.S. Treasury, certain Gulf Coast states (Texas, Louisiana, Mississippi, Alabama), the Land and Water Conservation Fund, and the Historic Preservation Fund.

Leases resulting from this proposed sale would 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, the following areas are unavailable and excluded from the lease sale: blocks subject to the congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006, blocks adjacent to or beyond the U.S. Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap, and whole blocks and partial blocks within the current boundaries of the Flower Garden Banks National Marine Sanctuary.

BOEM has also included fiscal terms that take into account market conditions and ensure taxpayers receive a fair return for use of the OCS. 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 pursuant to the sale, in recognition of current hydrocarbon price conditions and the marginal nature of remaining Gulf of Mexico shallow water resources.

Lease Sale 256 was originally scheduled for August, but due to the need to conduct additional analysis to consider recent changes in the oil and gas markets, which were due in part to the Covid-19 pandemic, the sale was moved to the fall.

All terms and conditions for Gulf of Mexico Lease Sale 256 are detailed in the Proposed Notice of Sale (PNOS) information package, which is available at https://www.boem.gov/Sale-256. Due to the Covid-19 pandemic, bids are only being accepted by mail.

The Notice of Availability of the PNOS will be available for inspection in the Federal Register at: http://www.archives.gov/federal-register/public-inspection/index.html on July 17 and will be published in the Federal Register on July 20.

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