U.S. May Postpone Gulf Lease Auction

Source:

"Additional environmental reviews needed before leases can resume."

Next year may be the first time in more than four decades that the U.S. does not lease areas in the Gulf of Mexico for oil or gas drilling due to additional environmental reviews planned by the Obama administration, a major oil-lobbying group said on Monday.

The American Petroleum Institute complained that 2011 could be the first year since 1965 without a U.S. government auction in the Gulf, depending on the length of the Interior Department's environmental review process.

Spurred by the BP oil disaster, Interior last week said it plans to complete supplemental environmental EIS for three remaining Gulf lease sales scheduled under the current five-year program.

In the past, additional environmental reviews have taken up to a year to complete, but API's Erik Milito said the department needs to move more swiftly to provide companies with certainty.

"Companies have to make decisions as to what they're going to do with their existing portfolio of leases," Milito said. "This could impact companies' decisions."

Even if the department completes its assessment in about four to six months, which Milito said is "optimistic," it is likely the next lease sale scheduled for March 2011 will be postponed.

Since the BP spill unleashed millions of barrels of oil into the Gulf and created the greatest environmental disaster in history, the department and drillers have clashed over the speed of offshore oil development.

From the temporary deepwater drilling ban to a slower permitting process, industry groups have complained the department is dragging its feet on offshore O&G projects.

The department says the Gulf spill revealed systemic problems with the U.S. offshore drilling sector and additional safety measures are needed.

"No announcements have been made regarding the next Gulf of Mexico lease sale," Bureau of Ocean Energy Management spokesman Nicholas Pardi said.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe