US to lease out Gulf of Mexico chunk for oil drilling

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Washington, Jan 27 (IANS) The US government Thursday announced plans to sell leases for 38 million acres in central Gulf of Mexico for oil exploration to increase domestic energy supplies.

The scheduled sale in June will be the second since the BP oil spill in the Gulf of Mexico in 2010. The leases are expected to generate one billion barrels of oil and four trillion cubic feet of natural gas, according to the US interior department's estimates.

The planned sale of all available unleased areas in the so-called Central Planning Area off Louisiana, Mississippi and Alabama followed US President Barack Obama's State of the Union speech Tuesday, in which he said a major task on his agenda this year would be to develop domestic energy supplies, reported Xinhua.

Expanding offshore oil and gas production is a major part of the country's comprehensive energy strategy to grow America's energy economy, and "will help us continue to reduce our dependence on foreign oil and create jobs here at home", US Interior Secretary Ken Salazar said.

Terms of the sale will reflect reforms "to ensure fair return to taxpayers and encourage diligent development", such as escalating rental rates to encourage prompt exploration, the Interior Department said in a statement.

Supporters of the sale said more oil exploration will create jobs, while opponents warned of the risks related to oil exploration.

The Deepwater Horizon drilling rig leased by BP exploded and sank in the Gulf of Mexico in April 2010, killing 11 workers and unleashed the worst oil spill in US history.

The US government in December last year auctioned offshore drilling leases in the western Gulf of Mexico, the first such sale since BP oil spill.