US Gulf of Mexico Oil & Gas Lease Sale Draws $159.4 million for 835,006 acres
A U.S. Gulf of Mexico lease sale held Wednesday morning yielded almost $159.4 million in high bids for 151 tracts, the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) reported. The auction offered 77.9 million acres (31.5 million hectares), of which 835,006 acres received bids, according to preliminary data from the BOEM. Of the 151 tracts that received bids, 117 were in water more than 800 meters (2,625 ft) deep.
Lease Sale 253 generated almost $159.4 million in high bids for 151 tracts in the U.S. Gulf of Mexico.
A U.S. Gulf of Mexico lease sale held Wednesday morning yielded almost $159.4 million in high bids for 151 tracts, the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) reported.
Lease Sale 253, which was livestreamed from New Orleans, saw BHP deliver the largest bid of $22.5 million for the Green Canyon 124 block.
The top five companies based on the sum of their high bids are:
- BHP | 20 high bids | $41.8 million
- Anadarko Petroleum | 14 high bids | $23.4 million
- Chevron Corp. | 17 high bids | $22.6 million
- Equinor ASA | 23 high bids | $16.8 million
- BP, plc | 21 high bids | $14.7 million
“We are excited about the results from today’s lease sale, which show a continued upward trend for the year,” said Andrea Travnicek, the Interior’s deputy assistant secretary for land and minerals management. “The total from today’s lease sale and the March sale is the highest since 2015 for high bids.”
Aside from BHP’s highest bid, Chevron and Royal Dutch Shell plc submitted the next highest bids at $6.7 million and $5.6 million, respectively.
The National Ocean Industries Association (NOIA) issued the following statement regarding what they referred to as “modest results” of the lease sale.
The results “reflect the cautiously optimistic attitude of an offshore industry still in recovery. While companies have improved the efficiency of their operations and rig rates and supply chain prices are more competitive, oil prices remain flat. Bidding activity today may reflect the slower than desired improvement in prices. There is also uncertainty surrounding pending regulatory actions such as financial assurance and fair market valuation.”
The NOIA noted that deepwater and ultra-deepwater tracts drew high interest in this sale and shallow water tracts also proved to be attractive.
“Overall, today’s sale demonstrates that the offshore oil and gas industry remains committed to the U.S. Gulf of Mexico, the NOIA stated. “Each newly leased block represents a chance for further exploration, development and economic and energy opportunity. The U.S. Gulf of Mexico will continue to be a vital part of America’s economic and energy future.”
A total of 27 companies participated in the lease sale.
To contact the author, email Valerie.Jones@Rigzone.com
U.S. offshore oil auction draws $159.4 million in bids for Gulf acreage
NEW YORK (Reuters) - A major auction of oil and gas leases in the U.S. Gulf of Mexico on Wednesday received $159.4 million in high bids, government officials said.
Combined with a March auction that drew $244.3 million in high bids, the total was the highest annual bid level since 2015, officials from the Bureau of Ocean Energy Management said in a conference call with reporters following the sale.
The auction offered 77.9 million acres (31.5 million hectares), of which 835,006 acres received bids, according to preliminary data from the BOEM. Of the 151 tracts that received bids, 117 were in water more than 800 meters (2,625 ft) deep.
Equinor ASA and BP Plc bid on the most tracts, with 23 and 21 bids respectively. BHP Group submitted 20 bids, including the largest single amount for acreage on a parcel in the Green Canyon formation.
Most bids centered around existing infrastructure where oil companies could place relatively inexpensive tie-backs to drilling platforms that are already in place. Companies also placed bids on more prospective acreage in the East Breaks and Lloyd Ridge formations, said Mike Celata, Director, BOEM New Orleans Office.
“I think companies are looking to the future in some of the bidding that they did today,” Celata told reporters on a conference call.
The outcome of the lease sale was the latest signal that the oil and gas industry maintains an interest in U.S. waters. Offshore drilling is a crucial part of the Trump administration’s “energy dominance” agenda to open up more federal land and waters to energy exploration.
Still, offshore oil accounts for just under 20% of U.S. production. Most of the recent U.S. boom in oil production has been focused onshore, where it is cheaper to drill than in deepwater.
Beyond competition from drilling onshore in shale formations, U.S. offshore acreage must also compete with opportunities off the coast of Brazil, Guayana and other basins.