After a moratorium on offshore oil drilling and a halt on the sale of leases that lasted over a year, the Interior Department is planning to once again sell leases.
The first sale offshore drilling lease sale since the BP oil spill in April 2010 is planned for December 14 of this year.
The 3,900 blocks will include over 20 million acres, reports Reuters, with the minimum bid price starting at $25 for shallow water leases.
Leases deeper than 1,312 feet, however, will increase from the normal base price of $37.50 to $100, reported the New York Times.
According to a study by the Interior Department encompassing 15 years of lease sales, companies that bid under $100 for their lease have developed significantly less.
The Department believes that increasing the base price will weed out bidders that lack motivation to explore the area and focus the bidding on companies willing to extract the maximum amount of oil from the land, said the New York Times.
This will mark the first sale since President Obama temporarily stopped all lease sales after the Deepwater Horizon oil spill in the Gulf of Mexico.
The spill, which killed 11 and dumped over 4.9 million barrels into the ocean, was a wake up call that has encouraged a rush of new regulations.
Kevin Salazar, the Interior secretary, told the New York Times:
“Since Deepwater Horizon, we have strengthened oversight at every stage of the oil and gas development process, including deepwater drilling safety, subsea blowout containment, and spill response capability.”
And with the “strengthened oversight”, the Department feels it is okay to once again progress with U.S. oil development in the Gulf.
As the New York Times reports, the 20 million-plus acres for sale will include leases that range between 9 miles and 250 miles offshore, with depths between 16 feet and almost 11,000 feet.
The Bureau of Ocean Energy Management, Regulation and Enforcement told the New York Times that they do not yet know what interest level will be or what revenue might be generated from the sales.
The last gulf sale, however, generated $920 million for the 37 million acres sold.
Major gulf leaseholders for now, according to Bloomberg, are BP (NYSE: BP), San Ramon, Chevron Corp (NYSE: CVX), Exxon Mobil Corp (NYSE: XOM), and Royal Dutch Shell (LON: RDSA).
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