WASHINGTON, Feb. 19 (UPI) -- Opening up more acreage in the Gulf of Mexico to potential oil and gas drillers could bring in more revenue to federal and state coffers, a regulator said.
The U.S. Bureau of Ocean Energy Management said it would offer up roughly 45 million acres for exploration development in the Gulf of Mexico through two lease sales in March. The sales mark the ninth and tenth such auctions covered in a five-year lease plan ending next year.
BOEM Director Abigail Ross Hopper said opening up more gulf acreage is part of an effort to capitalize on the nation's own resource potential.
"As an important component of the U.S. energy portfolio, the Gulf of Mexico holds vast energy resources that can continue to spur economic opportunities for Gulf producing states as well as further reduce the nation's dependence on foreign oil," she said in a statement.
The lease comes as some states along the southern U.S. coast that depend on oil and gas for revenue are feeling the pressure from the long slump in crude oil prices, down roughly 70 percent from their peaks above $100 per barrel in mid-2014. The first eight lease sales under the five-year program brought in around $3 billion in high bids.
The U.S. Energy Information Administration in a report estimated crude oil production from basins in the Gulf of Mexico is on pace to reach record levels by next year. Production should average about 1.6 million barrels per day this year and increase 17 percent by the end of 2017 to 1.91 million bpd. By then, output from the Gulf of Mexico will account for about 21 percent of total U.S. crude oil production.
EIA said production in the Gulf of Mexico is less sensitive to fluctuations in crude oil prices than shale basins in the Lower 48 states. Weak profits that came as a result of lower oil prices, however, means some companies are scaling back on their exploration and production budgets, reflected in a series of cancellations for major rig contracts in the Gulf of Mexico.
"These changes added uncertainty to the timelines of many Gulf of Mexico projects, with those in the early stages of development at greatest risk of delay or cancellation," EIA said in its report.
Eight fields started production in the Gulf of Mexico last year. Four are expected to enter into operations in 2016, with the Heidelberg field already producing as of January.