The Bureau of Ocean Energy Management (BOEM) completed its required evaluation to ensure the public receives fair market value for tracts leased in Central Gulf of Mexico Oil and Gas Lease Sale 247, held on March 22 of this year.
The sale – the last in the 2912-2017 Outer Continental Shelf Leasing Program - offered 9118 unleased blocks covering 48 million acres. Twenty-eight companies participated in the sale, submitting 189 bids on 163 tracts. A total of $274,797,434 was received in high bids covering 913,542.21 acres. Of the tracts receiving bids, 22 were in water depths less than 200m and 141 were in water depths greater than 200m.
After extensive geological, geophysical, engineering, and economic analysis, BOEM awarded 153 tracts receiving bids and rejected 10 high bids. The 10 rejected high bids totaled $10,848,507 and covered 56,365.79 acres, BOEM said in a 27 June press statement.
BOEM has determined that the value of those bids was insufficient to provide the public with fair market value for the tracts and will re-offer these tracts as part of the next lease sale, Sale 249 in August.
The highest bid accepted was $24,056,719 submitted by Shell Offshore Inc. for Atwater Valley Block 64. The tract receiving the greatest number bids was Garden Banks Block 1006 with five bids, BOEM said in a 29 June press statement.
US Secretary of the Interior Ryan Zinke said back in March that the strong sale reflected “continued industry optimism and interest in the Gulf’s Outer Continental Shelf, a keystone of the Nation’s offshore oil and gas resources and a vital part of President Trump’s plan to make the United States energy independent.”
It’s not unusual for BOEM to reject high bids, BOEM spokesperson John Filostrat told OE. In 2015, BOEM rejected eight high bids for Central Gulf Lease Sale 235. Companies can appeal a rejection to the regional director, but Filostrat said he hadn’t seen any appeals granted during his six years at BOEM.
Rejections are made based on BOEM’s evaluation of the seismic information they have, and if BOEM thinks a block holds more potential and resources than a bid reflects, Filostrat commented.
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