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BSEE extends most gulf deepwater leases disrupted by moratorium

This story was updated Nov. 2 with comments from IPAA.

The US Bureau of Safety and Environmental Enforcement (BSEE) completed its review of 1,413 deepwater oil and gas lease extension requests in the Gulf of Mexico and extended 1,381, or 97.7%, of them for 1 year. Leases had to be in water deeper than 500 ft, with no production as of May 15 and expiration scheduled on or before Dec. 31, 2015.

US President Barack Obama announced in his May 14 weekly radio address that qualifying leases where operations were disrupted by the moratorium imposed following the 2010 Macondo well accident and crude oil spill would be extended. US Sec. of the Interior Ken Salazar issued a secretary memorandum outlining the qualifications on June 16, and the US Bureau of Ocean Energy Management, Regulation, and Enforcement, BSEE’s predecessor agency, issued a notice to lessees and operators on June 29.

The move was not sufficient for US Sen. David Vitter (R-La.), who said on Oct. 31 that he would continue to block Rebecca Wodder’s nomination as Assistant US Interior Sec. for Fish, Wildlife, and Parks because extensions were not granted to shallow-water leases in the gulf as well.

“Completing 97.7% of only half of your job doesn’t mean the work is complete,” Vitter said. “In 2011 alone, more than 300 offshore leases in the Gulf of Mexico were due to expire. Pretending that shallow-water leases either weren’t affected or don’t matter is just sad. If these leases are allowed to expire, they will revert to the federal government, killing jobs and cutting off potential revenue from exploration and production.”

Independent Petroleum Association of America Pres. Barry Russell also applauded the deepwater lease extensions, saying on Nov. 1 that they would help minimize the painful uncertainty that has plagued the industry since the 5-month drilling moratorium was instituted last year.

“Unfortunately, shallow-water leases have not been included in this extension,” Russell said. “These companies—often smaller, independent producers—have also been adversely affected by the moratorium and the permitting slow-down that followed. We believe it judicious to extend these leases as well.”

Russell noted that while extending the deepwater leases was an important step, more needs to be done to promote the industry’s investment and increased economic activity in the gulf. “Therefore, we urge the administration to provide a stable business climate by opening additional offshore acreage for responsible development and developing a robust 2012-17 5-year plan,” he said.

Contact Nick Snow at nicks@pennwell.com.


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