GEO ExPro

Oil and Gas Leasing US Gulf of Mexico

Two region-wide oil and gas lease sales in 2019 in the Gulf of Mexico offer thousands of unleased blocks.
This article appeared in Vol. 16, No. 2 - 2019

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Oil and Gas Leasing US Gulf of Mexico

2017–2022 Oil and Gas Leasing Proposed Final Program Area for the Gulf of Mexico region. Source: BOEM. In March 2019 the United States Department of the Interior and the Bureau of Ocean Energy Management (BOEM) announced a proposed region-wide lease sale of 78 million acres (315,655 km2) which includes all available unleased areas in federal waters of the Gulf of Mexico. Lease Sale 253, the fifth offshore sale under the 2017–-2022 National Outer Continental Shelf Oil and Gas Leasing Program, will be livestreamed from New Orleans on August 21, 2019. Under this program, ten region-wide lease sales are scheduled for the Gulf. Two will be held each year and will include all available blocks in the combined Gulf of Mexico Planning Areas.

Lease Sale 253 includes almost 14,700 unleased blocks in the Gulf’s Western, Central and Eastern planning areas in water depths ranging from 9 ft to more than 11,100 ft (3 to 3,400m). Blocks subject to the congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006, and those adjacent to or beyond the US Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap, are all excluded from the sale, as are blocks within the Garden Banks National Marine Sanctuary. The lease awards will include stipulations to protect biologically sensitive resources, mitigate potentially adverse effects on protected species, and avoid potential conflicts associated with oil and gas development.

The fiscal terms offered include a royalty rate of 18.75% for leases in over 200m of water depth. In recognition of the marginal nature of remaining Gulf of Mexico shallow water resources and also the current hydrocarbon price conditions, the royalty rate for leases in less than 200m of water has been reduced to 12.5%.

In March the BOEM also announced that the previous region-wide Gulf of Mexico Lease Sale, no. 252, had generated $244,299,344 in high bids for 227 tracts covering 1,261,133 acres (5,100 km2). A total of 30 companies participated in the lease sale, submitting over $283,782,000 in bids, a 37% increase in revenue generated. Shell was the highest spender, picking up acreage across the entire region. Lease Sale 252 included 14,699 unleased blocks.

The offshore continental shelf associated with the Gulf of Mexico is estimated to contain 48.5 Bb of undiscovered technically recoverable oil and 141 Tcf of undiscovered technically recoverable gas.

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