Government Opens Gulf Of Mexico For Oil Business
The Obama administration auctioned off oil and gas leases in the western Gulf of Mexico Wednesday for the first time since theBP oil spillwreaked havoc on the Gulf coast of Louisiana in 2010.
The sale, held by the Bureau of Ocean Energy Management in a conference room in the Louisiana Superdome, attracted 241 bids from 20 companies for 161 tracts off the Texas coast.
The auction raised a total of more than $712 million, officials said, with one bid for a single lot coming in from ConocoPhillips at more than $103 million.
Officials in Louisiana said the sale of oil and gas leases represents the second-largest revenue stream for the federal government, behind the federal income tax.
"The Gulf is back in business," said U.S. Secretary of the Interior Ken Salazar in an interview with CNBC.
Among the bidders for the tracts was BP itself.
"All companies are going to have an opportunity to come and to bid on the Gulf of Mexico oil and gas development," Salazar said. "For us, the oil and gas is part of President Obama's energy portfolio. We believe strongly in renewable energy, but we also recognize that oil and gas will help power our economy forward."
There was a celebratory mood at the Superdome, where hundreds of oil and gas executives gathered to watch the bids unsealed and read in public for the first time. After making remarks and reading the first bids, Secretary Salazar headed to midfield at the stadium to playfully toss a football with members of his entourage.
"We're excited to get back to work in the Gulf," said Andy Radford, a senior policy adviser with the trade group American Petroleum Institute. "There's quite a bit of pent-up demand for leases in this area. It's been over two years since we've had a lease sale in this area."
Environmental groups were not happy with the decision to reopen the lease process.
"Local communities rely on clean waters for important fishing jobs and tourism. They don't need another massive oil spill," said EarthJustice's David Guest in a statement. "Allowing more deep-water drilling before safeguards are in place is repeating the same mistake that brought us the biggest environmental disaster in history."
A coalition of environmental groups filed a lawsuit Tuesday to block the sale, but government officials said they were pressing ahead Wednesday as planned. The government said the sale of oil and gas leases could lead to production of between 222 million to 423 million barrels of oil and 1.49 trillion to 2.65 trillion cubic feet of natural gas over the life of the leases.
For President Obama, the sale offers an opportunity to head into an election year with a rebuttal to GOP criticism that he's held up domestic oil and gas production and put the U.S. increasingly at the mercy of foreign sources of fuel. "Drill, baby, drill" became a popular Republican chant on the campaign train in 2008 and will likely be an issue again in the 2012 campaign.
The White House hailed Wednesday's sale as a major milestone in the Gulf Coast recovery. "This is the latest step by the Administration to meet a series of directives announced by President Obama in May 2011, which included additional lease sales, certain offshore lease extensions, and steps to streamline permitting, all towards the President's goal of expanding safe and responsible domestic oil and gas production," the White House said in a statement.