New Offshore Leases in U.S. Could Yield 1B Barrels of Oil

New offshore leases could mean big oil and natural gas hauls for drillers.

FE_DA_080714Drilling.jpg

An offshore oil drilling platform sits in the Gulf of Mexico, some 90 miles due south of Mobile, Alabama.

By SHARE

Who says the Obama Administration isn't a friend to fossil fuels? This week the Department of the Interior inked plans to auction off more than 38 million acres of federally owned waters in the central Gulf of Mexico to oil and gas drilling companies, reopening opportunities for energy firms to expand their offshore drilling operations.

According to government estimates, the area up for auction—scheduled to take place at the Mercedes-Benz Superdome in New Orleans in late March—could produce nearly 1 billion barrels of oil and 4 trillion cubic feet of natural gas.

"The Obama Administration is fully committed to developing our domestic energy resources to create jobs, foster economic opportunities, and reduce America's dependence on foreign oil," DOI Secretary Ken Salazar said in a statement. "Exploration and development of the Gulf of Mexico's vital energy resources will continue to help power our nation and drive our economy."

[READ: U.S. Energy Policy Lagging Practice]

The sale is the second under the Obama administration's Outer Continental Shelf Oil and Gas Leasing program for 2012-2017, and the first of five lease sales in the central Gulf. The November lease sale of more than 20 million acres in the western Gulf of Mexico generated nearly $134 million in bids, according to the Associated Press while another sale in the central Gulf held last June yielded $1.7 billion.

The central Gulf of Mexico was the site of the Deepwater Horizon disaster in 2010 when a well operated by BP blew out, spilling millions of barrels of crude oil into the Gulf and causing serious environmental damage. Since then, drilling activity has ramped up as companies are more optimistic about hitting deposits in deepwater regions.

[SENATORS: Give Green Light to Gas Exports]

But while the plan is an encouraging step toward opening up more federal lands for oil and gas developers and easing supply pressures, some critics say the administration isn't going far enough.

"The Department of Interior's five-year leasing plan remains a disappointment because it fails to unlock resources off the Atlantic and Pacific coasts, as well in the Eastern Gulf of Mexico and off parts of Alaska's coast," says Nick Loris, an energy policy analyst at the conservative Heritage Foundation think tank. "Doing so would generate hundreds of thousands of jobs, generate hundreds of billions of dollars for our cash-strapped government and lower prices at the pump."

More News: