In a normal year, the autumn months would be filled with the smell of brisket at a tailgate barbecue and the sound of college football fans cheering in their favorite team's stadium. But with the college football stadiums largely empty due to COVID-19, is there something that could fill the void? Well, maybe. The Bureau of Ocean Energy Management (BOEM) a couple months back issued a notice proposing Lease Sale 256 for oil and gas exploration of 78.8 million acres in the Gulf of Mexico (GOM). You will probably not be able to find the announcement of the lease sale on ESPN this November, but you will be able to tune into the livestream set in New Orleans. Today, we describe the process for bidding and acquiring lease acreage in the Gulf of Mexico.
RBN is pleased to announce that today’s blog was among the winning submissions in our first-ever blog writing competition held for students in Texas A&M’s Trading Risk & Investment Program (TRIP). For more about the contest and links to other top entries, click here.
The Gulf of Mexico is a vital source of oil and gas production for the U.S., accounting for 97% of all offshore production in the U.S. Outer Continental Shelf (OCS). The OCS consists of all submerged land that lies in coastal waters under the jurisdiction of the U.S., and contains what the BOEM estimates to be about 48 billion barrels of crude oil and 141 trillion cubic feet of natural gas that is undiscovered and technically recoverable. Lease Sale 256 is a part of a five-year schedule called the 2017-22 National OCS Oil and Gas Leasing Program, which is mandated by the Outer Continental Shelf Lands Act (OCSLA). This law, enacted in 1953, sets forth that the Bureau of Ocean Energy Management (BOEM) must propose and set guidelines for a five-year plan to sell oil and gas acreage in the OCS. Lease Sale 256 is the seventh sale under the 2017-22 program, and involves all of the available unleased areas in the federal-controlled waters of the Gulf.
Of note, Florida was exempted in the five-year OCS plan. Then, earlier this month (September 8), President Trump extended, for 10 years, a moratorium that was set to expire in 2022 on new lease sales in the Eastern GOM — an area that sits close to existing infrastructure and includes a play known as the Destin Dome, about 25 miles south of Pensacola, FL. The ban was also expanded to include the Atlantic Coast between Florida and South Carolina.
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