Two Gulf of Mexico federal oil and gas lease sales are being held in the New Orleans Superdome today. The U.S. Department of the Interior's Minerals Management Service Gulf of Mexico Region confirms that 1,057 bids were received from 78 companies on 615 tracts offered in Central Lease Sale 206, which is off the coasts of Louisiana, Mississippi and Alabama. Another 58 bids were received from five companies on 36 tracts offered in an area about 125 miles from the Florida Panhandle. Known as Eastern Lease Sale 224, this lease marks the first time bids have been taken in the eastern Gulf region.
In 2006, Congress opened up 8.3 million acres of additional territory in that region, an area estimated to have the capacity for producing 1.3 billion barrels of oil and 6 trillion cubic feet of natural gas--enough to heat 6 million homes for 15 years.
Most notable about Eastern Sale 224 is its impact on the state coffers in Alabama, Mississippi, Louisiana, and Texas. For the first time, these states will receive 37.5 percent of the revenues generated from all newly leased acreage in the eastern region. The revenue sharing provision was mandated by the Gulf of Mexico Energy Security Act of 2006, giving the states royalties from production in federal waters off their coastlines. U.S. Sen. Mary Landrieu co-authored the legislation, earmarking the revenues, an estimated $13 billion over the next three decades, for coastal restoration and hurricane recovery.
“Today the federal government finally begins fulfilling a promise President Truman offered Louisiana almost 60 years ago," Landrieu tells the INDsider. “Since I came to the Senate in 1997, it has been my No. 1 priority to get Louisiana its fair share of offshore oil and gas revenues and to apply it to shoring up our natural hurricane protection."
Two years ago Landrieu built a bipartisan coalition with Republican Senate Energy Chairman Pete Domenici of New Mexico, passing the Domenici-Landrieu Gulf of Mexico Energy Security Act into law. It provides Louisiana and the three other Gulf Coast states with the same share of revenues Truman offered six decades ago.
“Today in the Superdome, the first proceeds of more than half a century of effort came to fruition," Landrieu says. "Over time, this law means billions for Louisiana – every penny of which will be directed to coastal restoration and hurricane protection, which the law directs and our state constitution now confirms. Today we closed Truman’s chapter of our history and opened a new one – one in which Louisiana has its own long sought-after source of independent revenue to secure our future.”
MMS Director Randall Luthi says the number of bids received for both sales reaffirms the strong commitment of the offshore oil and gas industry to develop the nation’s oil and gas resources in the Gulf of Mexico, noting the four Gulf producing states will see immediate benefits from leases awarded in Sale 224. "They will share in the bonus bids received [today] and later in the rents and any royalties collected."
Revenue generated from Sale 224 collected by MMS in fiscal year 2008 will be disbursed to the eligible states beginning in fiscal year 2009.