Feds to sell central Gulf drilling leases in March

Oil and gas companies will have a chance to buy central Gulf of Mexico drilling leases during a March 20, 2013 auction, the Interior Department announced Monday.

The lease sale, which had been planned but not formally scheduled, will be the first auction of central Gulf drilling rights under the Obama administration’s new five-year plan governing offshore energy. It will follow a Nov. 28 auction of drilling rights in the western Gulf.

The more coveted central leases up for grabs include territories near BP’s failed Macondo well, the source of the nation’s biggest oil spill in April 2010.

Energy companies will have the chance to bid on about 7,250 unleased blocks that span  38 million acres. The acreage  includes leases in more than 11,100 feet of water.

The Obama administration said the sale announcement illustrated the president’s commitment to domestic energy development.

“We are moving full speed ahead on the president’s all of the-above energy strategy because the exploration and development of the Gulf of Mexico’s vital energy resources will continue to help power our nation and drive our economy,” said Interior Secretary Ken Salazar in a statement.

According to the Interior Department’s Bureau of Ocean Energy Management, which oversees offshore energy leases, the tracts on the auction block eventually could produce 460 million to 890 million barrels of oil.

But many of the tracts will never get bids; unlike Arctic waters around Alaska, where the Obama administration plans targeted leasing with areas up for sale after nominations from potential bidders, Gulf of Mexico sales generally include all unleased areas.

During the last central Gulf lease sale in June, energy companies offered more than $1.7 billion in high bids for more than 2.4 million acres. The spending was spurred by pent-up demand for the acreage, after a previous central Gulf lease sale was effectively canceled because of the 2010 oil spill.

Under the five-year lease plan, the  Bureau of Ocean Energy Management is set to hold 12 Gulf of Mexico lease sales before June 30, 2017. In addition, the government is planning three auctions of leases in the Cook Inlet near Anchorage and the Chukchi and Beaufort seas north of Alaska.

Industry officials and their allies in Congress have criticized the plan as anemic.

American Petroleum Institute spokesman Reid Porter said that “every lease sale is a positive step.” But, he added, “by bypassing other possible offshore areas the administration is missing opportunities to further build the foundation for our nation’s economic recovery and encourage new investments in U.S. energy resources.”