US to Release Offshore Blocks for Exploration

16 November 2009 (Last Updated November 16th, 2009 18:30)

The US Interior Department says it will lease 36 million offshore acres for oil and natural gas drilling in the Gulf of Mexico next year. The leases could yield up to 1.3 billion barrels of crude oil and 5.4 trillion cubic feet of gas, the department said. US Interior secretar

The US Interior Department says it will lease 36 million offshore acres for oil and natural gas drilling in the Gulf of Mexico next year.

The leases could yield up to 1.3 billion barrels of crude oil and 5.4 trillion cubic feet of gas, the department said.

US Interior secretary Ken Salazar said the development of the areas in the Gulf of Mexico would be an important part of the department's efforts to decrease US reliance on overseas oil, reports Reuters.

Lease Sale 213 will cover 6,800 tracts on 35.9 million acres situated up to 250 miles off the Alabama, Mississippi and Louisiana coasts, while the blocks are situated in water depths of 10ft to over 11,200ft.

The proposed sale blocks cover 4.2 million acres in the 181 South area close to the Alabama-Florida offshore border.

Blocks 400m–800m deep will have the initial lease term of five years, however, the lease life in the case of an exploratory well being drilled would be increased to eight years.

Seven years lease term with extension to ten years in the case of drilling at an exploratory well will be applicable for blocks 800m–1,600m deep.

The government will receive a royalty rate from energy companies based on 18.75% of the value of the oil and gas drilled in the offshore tracts by the companies.