A Tale of Two Lease Sales

Or, more accurately, two tales about the same lease sale…

Guest rant by David Middleton

Earlier this year, Interior Secretary Ryan Zinke announced that all available leases in the Gulf of Mexico would be offered in two area-wide sales each year.  This is in contrast to the old practice of offering the leases once a year in two or three separate sales (Western, Central and occasionally Eastern Gulf of Mexico planning areas).  The first area-wide sale under Zinke’s plan was held in August, the second will be held in March 2018.  Here is the Washington Post describes the March lease sale:

Trump to auction off a vast swath of the Gulf of Mexico to oil companies

October 24

The Trump administration made history Tuesday in proposing that nearly 77 million acres in the Gulf of Mexico be made available for companies wanting to purchase federal oil and gas leases — the largest offering ever in the United States.

In announcing the sale, the Interior Department compared the targeted waters to “about the size of New Mexico” and said the first lease sales off Texas, Louisiana, Mississippi, Alabama and Florida are scheduled for March next year. The event will include “all available un-leased areas on the Gulf’s Outer Continental Shelf,” a statement said.

Interior Secretary Ryan Zinke first broached such a sale shortly after he took office in March…

[…]

This part of the Gulf was the scene of arguably the worst environmental disaster in U.S. history, the 2010 Deepwater Horizon explosion and subsequent spill of 215 million gallons of crude that fouled beaches from Louisiana to Florida.

Years later, the spill’s effects are still being felt, according to a report by the nonprofit group Oceana.

Scientists have detected hydrocarbons from the well in 90 percent of pelican eggs more than 1,000 miles away in Minnesota, where the birds spend summer after wintering along the gulf. Dolphins living in Barataria, La., have experienced mortality rates 8 percent higher than dolphin populations elsewhere, and their reproduction success dropped 63 percent.

[…]


Bart Segel holds a pelican during a wash at Fort Jackson Bird Rehabilitation Center in Buras, La., on June 11, 2010. (Carol Guzy/The Washington Post )

[…]

WaPo

In March, Daryl Fears of the Washington Post said the new leasing plan “appears to mirror a plan offered by his predecessor a few months ago” and that “the plan is similar to a five-year proposal by the Obama administration.”  Six month later, Mr. Fears describes it as if President Trump is personally auctioning off “off a vast swath of the Gulf of Mexico to oil companies.”  At least Mr. Fears is consistent about one thing: Spending about half of each article mindlessly babbling about the Deepwater Horizon blowout and oil spill.

Here is a description of the same lease sale from World Oil Magazine

Secretary Zinke announces largest oil and gas lease sale in U.S. history

10/24/2017

NEW ORLEANS — U.S. Secretary of the Interior Ryan Zinke has announced that the Department is proposing the largest oil and gas lease sale ever held in the United States–76,967,935 acres in federal waters of the Gulf of Mexico, offshore Texas, Louisiana, Mississippi, Alabama and Florida. The proposed region-wide lease sale, offering an area about the size of New Mexico, is scheduled for March 2018 and includes all available unleased areas on the Gulf’s Outer Continental Shelf, surpassing last year’s region-wide lease sale by about one million acres.

“In today’s low-price energy environment, providing the offshore industry access to the maximum amount of opportunities possible is part of our strategy to spur local and regional economic dynamism and job creation and a pillar of President Trump’s plan to make the United States energy dominant,” Secretary Zinke said. “And the economic terms proposed for this sale include a range of incentives to encourage diligent development and ensure a fair return to taxpayers.”

Proposed Lease Sale 250, which will be livestreamed from New Orleans, will be the second offshore sale under the National Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022. Lease Sale 249, held in New Orleans last August, received $121 million in high bids. In addition to the high bids and rental payments, the Department will receive royalty payments on any future production from these leases. Outer Continental Shelf (OCS) lease revenues are directed to the U.S. Treasury, Gulf Coast states, the Land and Water Conservation Fund and Historic Preservation Fund.

“In order to strengthen America’s energy dominance, we must anticipate and plan for our needs for decades to come,” said Senator Lisa Murkowski, chairman of the Senate Committee on Energy & Natural Resources. “The administration’s decision to move forward with the largest offshore lease sale in our nation’s history is a key part of that effort. Whether in Alaska or the Gulf of Mexico, we should all support responsible development because it creates high-paying jobs, strengthens national security, and keeps energy affordable for our families and businesses.”

[…]

The estimated amount of resources projected to be developed as a result of the proposed region-wide lease sale ranges from 0.21 to 1.12 Bbbl of oil and from 0.55 to 4.42 Tcf. Most of the activity (up to 83% of future production) from the proposed lease sale is expected to occur in the Central Planning Area.

Proposed Lease Sale 250 includes 14,375 unleased blocks, located from 3 to 230 mi offshore, in the Gulf’s Western, Central and Eastern planning areas in water depths ranging from 9 to more than 11,115 ft (three to 3,400 m). Excluded from the lease sale are blocks subject to the Congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006; blocks that are adjacent to or beyond the U.S. Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap; and whole blocks and partial blocks within the current boundary of the Flower Garden Banks National Marine Sanctuary.

“American energy production can be competitive while remaining safe and environmentally sound,” said Vincent DeVito, Counselor for Energy Policy at Interior. “People need jobs, the Gulf Coast states need revenue, and Americans do not want to be dependent on foreign oil. We have heard their message loud and clear.”

The lease sale terms include stipulations to protect biologically sensitive resources, mitigate potential adverse effects on protected species, and avoid potential conflicts associated with oil and gas development in the region. The terms and conditions for Lease Sale 250 in the Proposed Notice of Sale are not final. Different terms and conditions may be employed in the Final Notice of Sale, which will be published at least 30 days before the sale.

The Bureau of Ocean Energy Management (BOEM) estimates that the OCS contains about 90 Bbbl of undiscovered technically recoverable oil and 327 Tcf of undiscovered technically recoverable gas. The Gulf of Mexico OCS, covering about 160 million acres, has technically recoverable resources of over 48 Bbbl of oil and 141 Tcf of gas.

World Oil

Journalism is supposed to focus on the 5 W’s and 1 H…

Five Ws and One H: The Secret to Complete News Stories

August 5, 2010 Jeremy Porter

If you ever sat through Journalism 101, you know all about the Five Ws and one H. For the rest of you, you may find this concept helpful when preparing interview questions or writing factual news stories. This concept may help you write better news releases too, considering they should contain news.

What are the Five Ws and One H? They are Who, What, Why, When, Where and How. Why are the Five Ws and One H important? Journalism purists will argue your story isn’t complete until you answer all six questions. It’s hard to argue this point, since missing any of these questions leaves a hole in your story. Even if you’re not reporting on the news of the day, this concept could be useful in many professional writing scenarios.

[…]

Journalistics

The World Oil article succinctly covers the 5 W’s and 1 H.

  • Who: U.S. Department of the Interior.
  • What: Area-wide Gulf of Mexico lease sale.
  • Why: To develop some of the estimated “90 billion bbl of undiscovered technically recoverable oil and 327 Tcf of undiscovered technically recoverable gas” remaining in the open areas of the Gulf of Mexico OCS.
  • Where: New Orleans LA.
  • When: March 2018.
  • How: Offer all available leases for competitive bidding by oil companies.

The Washington Post, on the other hand, never touched on Why, instead choosing to Whine about the 2010 Deepwater Horizon blowout and oil spill.  The Gulf of Mexico is awash with oil, the vast majority from natural oil seeps.  While, some traces of hydrocarbons can still be linked back to the 2010 spill, by August 2010, most of the oil was gone… Either recovered by clean up procedures, evaporated, burned and/or consumed by microbes.  Yet, this is the focus of the Washington Post’s “journalist.”?

All open leases in the highlighted areas will be available for bidding:

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44 thoughts on “A Tale of Two Lease Sales

  1. Apparently an 8% greater mortality rate (for a certain period of time, certainly not forever) amongst dolphins is cause for shutting off millions and millions of barrels of valueable oil. A hiundred EV drivers and poasengers beiung incinerated by horrendous battery fires, as documented on the net, is no reason to question the value of electric cars. So dolphins outrank humans in terms of value to the human race by a mile – dead humans less a problem than a few slighly shorter lived dolphins.
    I think that’s called hatred for one’s own species. But don’t expect these folks to behave logically and kill themselves, making the world better.

    • “A hiundred EV drivers and poasengers beiung incinerated by horrendous battery fires, as documented on the net,”

      where on the net?

      I have seen no evidence of that

      • Not sure of hundreds but there has been some in various countries. However in general I think all the studies say the number of fires in Electric Cars is less than Petrol/Diesel cars. There is no car make that has ZERO fires.

        So at this stage Electric Cars would equal less car fires which does go against the argument.

      • Didn’t a car lot with a number of Fiskers get flooded, causing several cars to go up in flames while surrounded by water? It was possibly due to “Superstorm Sandy”, iirc.

        Hate to be in one of those and, for some reason, flood the car.

      • Another point is that it tends to be older cars (both gas and electric) that have fires.
        Not only are there not many electrics, but they are relatively new compared to ICE cars.

      • There may not be many who have been incinerated by EV cars, but the UK has been having their people install A/C units that use propane as the coolant. I imagine all of these propane laden machines aging in place and how many houses are going to explode and burn, just as some of the first ones have done already. Yeah, electricity and flammable gases are such a good combination.

  2. I actually worry about the future of our republic considering the current state of news reporting. How can we have a well informed electorate when most of the news stories are either so biased they border on propaganda or so unresearched and unverified they are nothing but opinion.

    • JoeC., in response to your important question: the best way — not a guaranteed way as there is none — to have a well-informed USA electorate is to provide all young citizens with an instruction of [a] foundational American values; [b] via a classically liberal approach; and, [c] by which they may hone their critical thinking skills. Until such is done, your concern is entirely legitimate; where said otherwise ignorant electorate will be largely at the “mercy” of the propagandizing media, advanced educational systems and elsewhere … regardless of whether such propaganda is from the right, the left or otherwise.

      IMO, the more critical question is: how will such pro-freedom, classically liberal education — applied broadly to all [most?] members of our future generations — be accomplished? Will We the People find in ourselves a motivation to “get this done”? As always, it comes down to whether we want to live as freeborn citizens … or subjects.

      • Yeah, good luck with that! The only thing a young student is likely to get from today’s public schools is their own personal copy of “Heather has Two Mommies!!!”

      • Johnny Cuyana, what you have suggested requires taking back control of the education system (i.e., K-12) from the blue sky research and radical left-wing propaganda that comes out of the Education Science departments of our universities. And, each state legislature will have to define what constitutes foundational American values, the classically liberal approach to education, and teaching critical thinking skills.

        I agree with all three. However, I’m not sure our state legislators are any more competent that the Federal ones or any less subject to being bought by the teacher’s unions. Also, I’m not convinced our current crop of teachers, when taken as a whole, is intelligent enough to understand critical thinking, much less teach it.

    • No worries, George Washington and Tom Jefferson both complained loudly about the news media in their day. Our problem is we do not teach our children how to critically think for themselves.

    • “I actually worry about the future of our republic considering the current state of news reporting.”

      I do, too.

      A lying news media, which is what we have today, is probably the greatest danger Western Democracy faces.

      When Socialists/Totalitarians are giving you all your news, Democracy and Western Values are in trouble.

  3. The Left, of course today including the mainstream media, believes they must do everything possible to destroy cheap energy that drives capitalistic societies like ours. The so called environmental data in the Wash Po article is truly bogus. How does one come up with the reproductive rate and comparison to other dolphin populations if no one is doing such studies outside the supposedly impacted area. There are two species of pelicans, white and brown. White pelicans only winter in the south; browns are here year around. How do we know that white pelican eggs for birds wintering along the Gulf coast didn’t have “hydrocarbon” in their eggs prior to this? How many pelican eggs did they destroy to determine their guesstimate? My son-in-law happened to be on Alabama beaches when the news media was screaming about all the oil coming ashore. The week they were there, they saw clean up crews but no oil. I drove down along the coast to as far west as Panama City, saw no oil. Oystermen in Apalachicola Bay got some money from the settlement but it wasn’t oil that destroyed their industry. Years ago at a couple of public hearings on offshore mining and oil/ gas exploration I had to give Florida’s opposition to any offshore drilling. After the third time I was driving back home when it suddenly dawned on me how stupid such a position for Florida was. We are after all a tourist state. People visiting the state do not get here walking, on bikes or by clipper ship. I refused to ever again give the Florida policy. I thought I was get in deep trouble and I did from some politicos but I made as many friends from my stand.

    • My wife and I drove from Dallas to Pensacola shortly after they capped the well. We drove back along the coast, through Mobile, Gulfport, Biloxi, etc. Never saw any oil… We did see lots of clean-up crews sitting around (at BP’s expense) and the community organizing office BP was required to set up in Pensacola. It was empty. A lot of businesses, that never saw a drop of oil, were damaged by the Obama administration and media hyping of the spill. Our hotel on the beach (Hilton IIRC) was offering deep discounts. We hired a boat to tour the Pensacola coastline. The “captain” said he was having his worst season ever. The “highlight” being the brief period of time when BP hired just about every boat in town when the slick appeared to be headed toward the Florida panhandle.

      The oyster crop was primarily damaged by damaged by excess freshwater released from the Mississippi River into the estuaries in an effort to prevent oil from washing ashore…

      http://digitalcommons.mainelaw.maine.edu/cgi/viewcontent.cgi?article=1029&context=oclj

      • From those I talked to on the waterfront at the time, they knew it was the Obama administration and the news media that had screwed them economically. Louisiana oyster industry has fairly well recovered. Apalachicola Bay hardly at all. After decades of managing the Bay fairly well, rebuilding oyster beds, fighting with Georgia and Atlanta over water down the Flint-Apalachicola, and carefully managing quality the bay, after several natural perturbations, was just overfished due to a change in management.

  4. “The Washington Post, on the other hand, never touched on Why, instead choosing to Whine about the 2010 Deepwater Horizon blowout and oil spill.”

    The WP simply has a different viewpoint about the ‘Five Ws and One H of Journalism’:
    • Whine
    • Whine
    • Whine
    • Whine
    • Whine
    • How much

    • Not only should the 5 W’s and H be addressed in the story, but I was taught that they should appear IN THE FIRST PARAGRAPH if not in the very first sentence. The mentions could be terse, but if the instructor could not ascertain the scope and “news” after the first paragraph your submittal was rejected (failed).
      Furthermore we were taught to be judicious in the selection of adjectives so as not to appear biased or editorializing.
      AND…this was taught at the elementary grade level. If these “journalists” have waited until university level studies to learn this then they probably have much poor practice to “unlearn”.

  5. The ‘Five Ws and One H of Journalism’ have been replaced with the ‘Main A of Journalism”, Agenda.

  6. The WaPo editors doesn’t demand its journalists actually adhere to principles of journalism when there’s a political agenda to grind?

    I’m shocked, shocked I say! Next I suppose you’ll tell me the NYT doesn’t either!

  7. Much of this area is very deep ancient ocean floor (from the first break-up point of Pangea) so probably will not have any oil and/or will just not be accessible anyway.

      • First area to start splitting away as North America splits from Africa and South America. This is the alignment at 260 Mya.

        All the deep parts here are the original rifting which has slowly sunk into the mantle like all new oceans do and like the Atlantic ocean has done. The deepest parts here are 230 million years old.

      • The Gulf of Mexico basin is filled with up to 50,000′ of sedimentary column from the Jurassic up to the Quaternary.

        Figure 1: Regional dip-oriented transect from onshore US to Campeche salt basin. This 2D composite line demonstrates the value of evaluating a basin from margin-to-margin to better understand the distribution of known plays in mature areas and the ability to reduce uncertainty in the prediction of hydrocarbon potential in unexplored areas.

        Figure 2: Integrated structure map (below mean sea level) to the Middle Jurassic Unconformity over the rifted continental margins (base salt or younger marine sequence where salt is absent) and to the top of oceanic crust in the deep central Gulf of Mexico, in meters. Abbreviations: LU, Llanos Uplift; SMA, San Marco Arch; RGSB, Rio Grande Salt Basin; BL, Burgos Lineament; TA, Tamaulipas Arch; CSB, Campeche Salt Basin; ETSB, East Texas Salt Basin; HSB, Houston Salt Basin; SU, Sabine Uplift; LSB, Louisiana Salt Basin; MU, Monroe Uplift; MSB, Mississippi Salt Basin; WA, Wiggins Arch; DSB, Destin (Appalachicola) Salt Basin; SP, Southern Platform (Florida Elbow); TB, Tampa Basin; SA, Sarasota Arch, SFB, South Florida Basin; FS, Florida Straits; GE, Georgia Embayment rift basin; FPA, Florida Peninsular Arch; CP, Campeche Platform; WGT, West Gulf Transform; TFL, approximate trend of controversial Trans-Florida Fault Zone; NWCFB, Northwest Caribbean Fold belt.

        https://www.hgs.org/civicrm/event/info?id=1596

        http://www.mysanantonio.com/business/fool/article/Anadarko-Reported-Its-Phobos-Discovery-in-the-4525406.php

        In 2016, average daily production from the Federal waters of the Gulf of Mexico was 1.6 million barrels per day. Proved reserves at the end of 2015 were around 4.3 billion barrels. Since 1947, the total production has been 21.5 billion barrels of oil an 189 TCF of gas.

        I’m pretty sure there’s a lot of oil & gas in the Gulf of Mexico and still a lot left to find.

  8. From what I know and understand of hydrocarbon spills, organisms feed on spilled oil quickly and degrade it to harmless compounds including proteins from biologic growth. This contributes to the food chain enhancing aquatic life. There are instances where initial contact with spilled oil causes harm and death to aquatic life, but the recovery period is quick, even for a massive spill such as the one caused by Deepwater Horizon.

    There are consequences to all energy sources including wind and solar power production and use of EVs and hybrid vehicles, but no one accounts for the whole impact of any technology, only the impact that means something to themselves. So the greens attack fossil fuels and everyone else criticizes green technologies. Truth lies somewhere in the middle between these two extremes. But in terms of cost and availability, fossil fuels have a commanding lead over any other energy source.

    • As I recall, President Obama refused to allow a clean-up operation (after the Deepwater Horizon spill) because the operator expected ONLY around a 75% success rate of oil recovered. So instead, the Gulf clean-up efficiency was 0.0%.

      • Bob, you are incorrect regarding a “refusal.” People complained that Obama did not suspend the Jones Act, but there were a multitude of foreign flagged vessels participating in the cleanup efforts. The Jones Act did not apply. The Jones Act is a trade and commerce law that was enacted in 1920 as part of a larger Marine Merchant Act. It requires all trade delivered between U.S. ports to be carried in U.S. flagged vessels constructed in the United States and owned by American citizens

  9. There is another “W” to consider. It is used when writing real estate addenda. “What happens if you do or don’t”. It is important because it will be specific about the consequences of action or inaction.

    • Unless the course of action and its consequences are completely understood and the absence of such are also completely understood then your “What” becomes purely speculative editorial.

      If you do not know with absolute certainty the effects of action or inaction you can only speculate.

      Furthermore if you state other’s speculations such as “some studies say…” without also mentioning “that other studies disagree” you have sacrificed balance and objectivity.

      • In reporting this story the what is area-wide Gulf of Mexico lease sale. The what happens if you do or don’t is whether there is going to be more crude available or not and how much money the government will or won’t receive. You can also include what happens if a company wins or loses the bid. That is what a reporter should include in this piece.

      • The what happens if you do or don’t is whether there is going to be more crude available or not and how much money the government will or won’t receive.

        The former is a strawman fallacy, the latter depends on how many companies choose to bid, how much they expose in high bids and how much production is established.

        You can also include what happens if a company wins or loses the bid.

        This should be intuitively obvious, even to Darryl Fears. If a company makes a high bid on the lease and the government accepts the bid, they get the mineral rights to that for 5-10 years depending on water depth.

        If they establish production on the lease, they can hold the lease as long as their wells are producing. The government gets 1/6 to 1/8 of the gross revenue, then gets about 35% of the profits from the production.

  10. Dave,

    Will this be difficult for the exploration companies to manage? I’m in a completely different (actually, a competitor) industry, so obviously wouldn’t know, but it seems like valuation of all this simultaneously could be really challenging. Especially for smaller players. Or, is it easier to manage since you don’t have go through the bid process piecemeal?

    rip

    • Easier. Most of the activity is in the Central Gulf of Mexico (AKA Offshore Louisiana). Not much of the Eastern Gulf is open and the Western Gulf shelf is mostly gas and much of the infrastructure is gone. So we get two shots at the Central Gulf and the bits of the Western Gulf that are oily and the tiny bit of the Eastern Gulf that’s open.

  11. “Scientists have detected hydrocarbons from the well in 90 percent of pelican eggs”. Scientists can also detect aspirin in 100% of pelican eggs. On the other hand, it is nice to know that scientists can not only detect hydrocarbons, but even identify the well.

    • Green pscienctist can tell which CO2 molecule comes out of a good source like bio-diesel and which out nasty coal e.g.
      And Santa lives at the Northpole.

      • No, the north pole will always remain where Earth’s axis intersects the surface. How that differs from the “magnetic north pole” is another subject.
        But yes, the north magnetic pole is shifting further southwest currently. it was drifting southeast, but recently shifted its direction.

    • They can also measure the radiation that drifted across the pacific from Fukashima, but will neglect to mention that the levels measured are 100 times less than that emitted by a common banana.
      Distinctions without significance.

      “They use statistics much the same way a drunk uses a lamp post, for support rather than illumination.” -Lange

  12. I think that the worst environmental disaster ever (confined to oil spills in US waters) was the Exxon Valdez, which left much more oil to clean up. A lot of those “215 million gallons” were gas. This well had a high GOR, which is why it looked really bad on the video taken near the seafloor, but relatively little oil ever got to beaches. Compare this with how much oil was cleaned from Prince William Sound. The worst environmental disaster in the US will be when one of Hanford’s tanks fails.

  13. Jobs that will be opening up as a result of drilling offshore pay very well if the companies are required to use U.S. labor. They will definitely be a boon to Southern economies for years to come.

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