The government is set to rake in more than $1 billion in high bids during today’s auction of oil and gas leases in the Gulf of Mexico, but not everyone is celebrating the haul.
Rep. Doc Hastings, R-Wash., the head of the House Natural Resources Committee, said the Obama administration is unfairly taking credit for today’s sale of central Gulf leases, which includes one auction that was postponed to allow fresh environmental assessments in the wake of the Deepwater Horizon disaster.
“While the Obama administration has now canceled and delayed more offshore lease sales than they have held, that is not stopping them from patting themselves on the back for holding a lease sale that was originally scheduled by the previous administration,” Hastings said. “President Obama is not fooling anyone into thinking he suddenly supports increased offshore American energy production after he spent the last three and a half years driving rigs overseas, putting thousands of people out of work and devastating local economies through his anti-energy policies.”
Sen. David Vitter, R- La., joined in throwing brickbats. “Holding a lease sale is a good, common-sense act,” but it’s not enough, Vitter said.
“I certainly hope our efforts to knock some sense into the administration about the critical nature of energy production in the Gulf of Mexico are starting to pay off,” Vitter said. “But until we see a positive trend with lease sales and issuing drilling permits, no one should be remotely convinced that Washington’s off-course energy policy is on the right track.”
Not surprisingly, administration officials had a different view.
In opening the sale today in New Orleans, Interior Secretary Ken Salazar declared “the Gulf of Mexico is back in business.”
Heading into the auction, industry officials were expecting a robust sale, driven by pent-up demand for the acreage, recent big discoveries in the Gulf and strong oil prices earlier this year.
For nearly three hours this morning, Bureau of Ocean Management officials stolidly read off nearly 600 sealed bids by four dozen companies wanting the chance to drill on 454 tracts in the central Gulf of Mexico.
It didn’t take long for some of those bids to exceed the highest offering in the last central Gulf lease sale in March 2010, when Anadarko and Mariner Energy pledged $52.5 million for a single block in the Walker Ridge area.
For instance, five companies bid on Keathley Canyon block 745, with amounts ranging from $11 million (from Apache, Repsol and other partners) to $110 million (from BP).
Today’s auction was technically a combination of two previously scheduled central Gulf lease sales, including one originally slated for 2011. The Interior Department postponed the 2011 sale to allow time to update required environmental reviews of the region that took the Deepwater Horizon disaster into account. Wednesday’s sale is a combination of the postponed 2011 auction and the one slated for 2012.
Today’s auction was the last oil and gas lease sale in a five-year plan governing energy development on the outer continental shelf from 2007 to June 30, 2012. The Interior Department is finalizing a new five-year plan for July 2012 through 2017 that would schedule 12 sales in the Gulf of Mexico, including one in the central Gulf next year.
With its proposed 2012-2017 plan, the Interior Department also is tentatively planning lease sales in the Beaufort Sea near Alaska in 2015 and the nearby Chukchi sea in 2016. A possible sale of Cook Inlet leases also could take place in 2013.
Randall Luthi, a former head of the Minerals Management Service (the ocean energy bureau’s precursor) and the president of the National Ocean Industries Association, said the sale “shows the kind of results we can have when industry and the federal regulators work together in a cooperative, non-combative manner.”
Luthi credited the Obama administration with holding the combined sale.
“(Bureau) Director (Tommy) Beaudreau and Secretary Salazar made the effort to have these two sales before the expiration of the 5-year program, and industry responded in kind, by stepping up to the plate and hitting a home run for domestic energy production,” Luthi said.
