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Oil and gas lease sale in Gulf of Mexico would be first since Deepwater Horizon spill

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The Interior Department announced Friday that it would hold the first oil and gas lease sale for the Gulf of Mexico since the Deepwater Horizon explosion and spill last year.

The lease sale to be held Dec. 14 will include all unleased areas in the western gulf, covering 20.6 million acres off the Texas shore in water from 16 feet to more than 10,975 feet deep. The Obama administration said it would raise the minimum bid for deepwater leases to $100 an acre from the current $37.50 an acre. The current minimum has not changed since 1999, when oil prices ranged from less than $9 a barrel to $24.

The lease sale is part of a gradual return by the Obama administration to policies it was pursuing before BP’s Macondo well blew out and spilled nearly 5 million barrels of oil in the Gulf of Mexico. Recently, the Interior Department also gave an approval that moved Shell Oil one step closer to drilling next year in the Chukchi Sea off northwestern Alaska.

Last week there were 27 rigs operating in the deepwater Gulf of Mexico, according to the department’s Bureau of Ocean Energy Management, Regulation and Enforcement. Thirty-three rigs were operating when the Deepwater Horizon accident occurred on April 20, 2010. The number of rigs fluctuates from week to week, the bureau noted.

But the administration’s move did little to blunt criticism it has been receiving from the oil industry or Gulf Coast lawmakers unhappy with the pace of leasing and permitting. Some environmental groups lamented that the Interior Department was moving too quickly, given the incomplete damage assessment of the Deepwater Horizon spill.

“Announcing a lease sale is a long way off of actually having drilling activity,” said Adam Feinberg, a lawyer who represented companies that sued the Interior Department and won a court order for faster permitting earlier this year.

Sen. Mary Landrieu (D-La.) called the new lease sale “an important and encouraging step toward getting the Gulf of Mexico and its hardworking people back to work.” But she complained that “the slow pace of new permits in the Gulf places lingering uncertainty over this critical industry,” which she said brings in billions of dollars to the Treasury and employs thousands of Louisianians.

The American Petroleum Institute, the oil industry’s lobbying group, said it hoped the administration would follow up the lease sale with others for areas off the coast of Alaska and along the Atlantic seaboard.

Groups opposed to offshore drilling, however, said the new lease sale should not take place.

“Rushing this lease sale puts marine ecosystems at risk before the ink is even dry on the impacts of the BP spill,” said Jacqueline Savitz, senior campaign director for international ocean conservation group Oceana. She said that Bureau of Ocean Energy Management, Regulation and Enforcement has not fully assessed the environmental impacts of the spill or determined how to fix shortcomings in spill response and cleanup capabilities.

“BOEMRE appears to be caving to intense pressure from the oil industry to return to ‘business as usual,’ without regard for the extraordinary risks to already imperiled marine animals,” Savitz said.

The petroleum institute noted that the December lease sale will avoid making 2011 the first year since 1958 without an offshore lease sale.

Erik Milito, API’s director for exploration and production issues, said in a statement that he worried that the increase in the minimum bid might “discourage investment.”

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