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First Drilling In 30 Years For This Forgotten Petro-Play?

Critical policy shift announced by the U.S. government this week. Opening the door for oil and gas drilling in a place that hasn’t seen any activity for three decades.

That’s the Atlantic Ocean. Where legislators from the Department of the Interior are now looking at conducting a historic leasing round for petroleum exploration.

The Department released Tuesday a draft strategy for offshore oil and gas leasing, covering the five-year period from 2017-2022. Related: Spain To Consider Fracking Following Canary Islands Failure

As expected, much of the planned activity for this period focused on the Gulf of Mexico–with 10 lease sales planned here for the time frame. An additional three lease sales were contemplated for Alaska.

But the big surprise came in the Atlantic. Where Interior said it is planning for one lease round during the 2017-2022 period–likely covering areas of offshore Virginia, North and South Carolina, and Georgia.

That’s a major shift from policy over the last 30 years. With the last wells in the Atlantic having been completed in the early 1980s. Since that time, the area has been completely closed to petroleum exploration.

The move potentially opens up some very interesting targets for E&P firms. With the Atlantic margin in places like Florida having exposure of possible carbonate reservoir rocks, which are deeply buried and largely inaccessible in the Gulf of Mexico region. Related: Oil Industry Withdraws From High Cost Areas

Drilling along the Atlantic could thus tap into some plays the modern U.S. petroleum sector has never seen. Creating the potential for major discoveries here.

The Interior Department qualified its Atlantic plan, saying that it will now consider public comments on the suggested lease sale. The leased area will also reportedly include a 50-mile “coastal buffer” zone along the shore–with drilling taking place only in deeper waters.

The Department said that it sees the sale happening “late” in the 2017-2022 period. We thus may not see movement soon on specific licenses here–nonetheless, given the potential scale of opportunities, it’s worth watching to see whether this movement gains momentum.

Here’s to a new lease,

Dave Forest

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