Despite a number of pending lawsuits brought by states over the potential environmental hazards of offshore drilling, the Interior Department went ahead yesterday with the largest oil and gas lease sale in U.S. history, putting up for auction more than 4,000 East Coast offshore drilling tracts.
The only problem was there weren't many takers.
A total of 53 bids were made on only 40 of the available 4,000 tracts. The bids, made by a dozen oil companies, totaled $86.8 million, with the winning ones valued at $71.1 million. Of the 4,000 tracts, 454 of them off the coasts of New York, Maryland and Virginia were considered so environmentally sensitive that those three states filed suits against the federal government to stop their sale.
The states' fears of potential hazards to marine, fishing and seafood industries were apparently assuaged when the oil companies bid on just four of the 936 leases that had been contested.
Those four are located off the coast of New York and about 90 miles off Cape May, N.J. A full environmental hearing will be held to determine whether the leases should be awarded.
Tom Deming, an assistant state attorney general in Maryland, said the closest winning bid to the Maryland shore was on a tract 73 miles off the coast of Virginia.
"Of course, we're happy there won't be any oil or gas drilling in our area," said Deming. "Our concept that there should be a unique open space off the Maryland shore is secure for the time being.
"We had no way of knowing if anyone would or wouldn't bid. And we certainly served notice to Interior how seriously we consider this issue," said Deming, adding that Maryland's lawsuit against Interior will now be dismissed.
The tracts are located in a 22.7 million-acre area on the outercontinental shelf extending from offshore Martha's Vineyard, Mass., to North Carolina.
Interior officials said bidding met their expectations in the first sale of broad tracts as far as 195 miles from shore under Secretary of Interior James Watt's five-year outercontinental leasing program.
They and oil executives called the bidding "bold," considering that oil companies have yet to make any commercial discoveries in the area, which includes tracts in water 5,000 to 7,000 feet deep.