Gulf drilling leases go on sale in Dec.

Aug. 20, 2011 at 10:22 AM
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WASHINGTON, Aug. 20 (UPI) -- The U.S. Department of Interior says it is more than doubling the minimum bid for the right to drill oil wells in deep water in the Gulf of Mexico.

Announcing the first sale of oil drilling rights since the BP disaster in April 2010 that killed 11 people and dumped 4.9 million barrels of oil into the gulf, the Interior Department said it hoped the increased price will prevent the hoarding of drilling permits, The New York Times reported.

The new drilling permits go on sale Dec. 14, and the Interior Department said Friday the minimum bid to drill in the gulf's deep water has increased from $37.50 an acre to $100 per acre.

The December auction is for more than 20 million acres in the gulf. Interior Department officials said the increase in price was based on a study of lease sales in the gulf for the past 15 years that determined leases that received high bids of less than $100 per acre experienced almost no exploration and development.

"We are hopeful that this does not discourage investment in these vital domestic resources," said Erik Milito, a senior official at the American Petroleum Institute, a petroleum lobby.

President Barack Obama suspended drilling in the gulf following the BP disaster; resuming the leasing fulfills a promise Obama made earlier this year to encourage domestic gas and oil exploration in the gulf, the shores of Alaska and in the Atlantic.

Administration officials believe billions of barrels of domestic oil have gone untapped because oil companies allegedly delayed drilling in areas for which they already have permits.

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