U.S. offers 77 million acres in GoM sale, oil majors bid for less than 1 million

U.S. Gulf of Mexico lease sale, largest in history by the offered acreage, attracted what has been described as a “tepid response” by the oil and gas majors.

The U.S. administration had offered more than 77 million acres in the U.S. Gulf of Mexico, however the bids were placed only for 815,403 acres in federal waters of the Gulf of Mexico.

Region-wide Gulf of Mexico Lease Sale 250 generated $124,763,581 in high bids for 148 tracts covering 815,403 acres in federal waters of the Gulf of Mexico. To remind, the Trump administration had offered 14431 tracts.

A total of 33 companies participated in the lease sale, submitting $139,122,383 in bids.

Lease Sale 250 included 14,474 unleased blocks, located from three to 231 miles offshore, in the Gulf’s Western, Central and Eastern planning areas in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters).

BP submitted the biggest number of high bids – 27 – for a total amount of $20 million. Chevron submitted 24 high bids, for around $29 million in total. Shell follows with 16 high bids for $23 million.

France’s Total submitted 9 high bids for Gulf of Mexico acreage for a Total sum of $15 million. Worth noting, Total submitted a highest bid on a single block, bidding $7 million for NH16-10 Mississippi Canyon 697 area.

Commenting on the lease sale Interior Assistant Secretary for Land and Minerals Management Joe Balash said: “Today’s lease sale is yet another step our nation has taken to achieve economic security and energy dominance. Today’s results will help secure high-paying offshore jobs for rig and platform workers, support staff onshore, and related industry jobs, while generating much needed revenue to fund everything from conservation to infrastructure.”

NOIA: Make U.S. shelf attractive

Randall Luthi, president of National Ocean Industries Association (NOIA), a trade association representing the offshore industry, said the bidding activity in the sale reflected improving, yet still lower than desired commodity prices. He said that both the number of bids submitted and the total amount of high bids received are up compared to the August 2017 sale figures.

To remind, the August 2017 sale, the first offshore lease sale under the U.S. National Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2017-2022 yielded over $121 million in high bids on 508,096 acres in the Gulf of Mexico.  It had offered approximately 76 million acres offshore Texas, Louisiana, Mississippi, Alabama, and Florida for oil and gas exploration and development.

Luthi said on Wednesday: “Bonus bids are an indicator of the ability and confidence of producers to invest in the Gulf of Mexico. These are not new fields, and producers are attempting to pick the best of what is left. From that view, the bids demonstrate a solid commitment by the oil and natural gas industry to continue to invest in U.S. offshore energy and U.S. jobs.

“While the outlook is promising, it also comes with a note of caution that with companies looking globally for exploration opportunities, the United States must continue to evaluate how to keep the Gulf of Mexico and other parts of the U.S. outer continental shelf attractive in light of competition from Brazil and Mexico.”

To provide some perspective on this week’s lease sale, back in 2012, when the oil prices were around a $100 a barrel, a lease sale focused on the Central Gulf of Mexico attracted more than $1,7 billion. At the time, a total of 56 offshore energy companies submitted 593 bids on 454 tracts covering more than 2,402,918 acres. The sum of all bids received totaled more than $2,6 billion.

Offshore Energy Today Staff

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