Federal regulators on Friday announced plans to auction almost 43 million acres of offshore oil and gas leases in the central and eastern Gulf of Mexico early next year.
The bulk of the acreage up for lease is in the central Gulf, where the proposed sale will include about 7,919 federally owned oil and gas drilling tracts located three to 230 miles offshore. The areas are in water depths ranging from nine to more than 11,000 feet, said the Bureau of Ocean Energy Management, which regulates offshore drilling and reviews each winning bid.
About 175 tracts — spanning more than 595,000 acres — will be up for bid in the eastern Gulf. Those areas are located at least 125 miles off Louisiana’s coast and in water depths ranging from 2,657 feet to 10,213 feet, regulators said.
The planned sale marks the ninth and 10th lease auctions to be held as part of the federal government’s 2012-17 offshore leasing program. Word of the sale came about a month after federal regulators held the smallest oil lease sale ever in the western Gulf, which brought in $22.7 million in bids for 33 tracts amid slumping oil prices.
Though the lease sale is still months away, Randall Luthi, president of the National Offshore Industries Association, said he expects it will draw more interest from operators than last month’s lease auction partly due to its prime location. “The central sales traditionally are better sales,” he said, noting that some operators may also look to grab available tracts in order to consolidate other blocks that are already under development.
“Certainly, it’s not going to be the type of sale that we saw three or four years ago,” Luthi said. “I just can’t see the conditions changing that quickly, but I’m not sure it’s going to be the worst sale in history if things get worse. We certainly hope not. We’re hoping that oil prices will stabilize and continue to rise in the next six months.”
U.S. crude sold for $44.63 a barrel in New York on Friday, less than half the price a year ago.
Last March, a central Gulf lease sale netted more than $538.8 million in high bids for 169 tracts. That was down from a central lease sale held a year earlier, which brought in $850.8 million worth of high bids for 326 tracts.
For the upcoming lease sale, BOEM estimates that the central area leases could lead to the production of 460 to 894 million barrels of oil and 1.9 to 3.9 trillion cubic feet of natural gas. In the eastern area, production estimates suggest it could net 71 million barrels of oil and 162 billion cubic feet of natural gas.
The lease sale is scheduled for March in New Orleans.
Follow Richard Thompson on Twitter, @rthompsonMSY.