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Gulf of Mexico Shallow Water Leases Offered at Reduced Royalty Rate

On July 13, U.S. Secretary of the Interior Ryan Zinke announced the availability of 75.9 million acres in the Gulf of Mexico for lease for the purpose of oil and gas exploration.  The sale will be held on August 16, 2017 in New Orleans. 

To encourage oil and gas exploration, shallow water leases will have a reduced royalty rate.  Leases in less than 200 meters of water will have a 12.5% royalty rate, and those in depths greater than 200 meters are subject to an 18.75% royalty rate.  The sale will include 14,220 unleased blocks, from three to 231 miles offshore in water depths from nine to 11,115 feet.   

This sale is the first offshore sale of the Outer Continental Shelf Oil and Gas Leasing Program, which was created as required by the Outer Continental Shelf (OCS) Lands Act.  The Leasing Program covers the years 2017-2022 was approved in early 2017.  It scheduled 11 potential lease sales in two program areas in all or parts of 4 OCS planning areas: 10 sales in the combined Gulf of Mexico (GOM) Program Area, and one sale in the Cook Inlet Program Area offshore Alaska.