The US Bureau of Ocean Energy Management (BOEM) announced that its Western Gulf of Mexico (GoM) lease sale 246 held today (19 August) attracted US$22.7 million in bids. The BOEM and industry advocates say the sale reflects current market conditions, but demonstrates the oil and gas industry’s willingness to develop GoM resources.
A total of five offshore energy companies submitted 33 bids on 33 tracts, covering about 190,080 acres. Lease Sale 246 offered 4083 unleased blocks, covering about 21.9 million acres, some 9-250nm offshore in water depths ranging 16-10,975ft (5-3340m).
According to BOEM statistics on the sale, the five bidders were BHP Billiton (which submitted 26 bids, the most of any company), Colombia’s Ecopetrol (submitted four bids), US-independent Anadarko Petroleum (submitted three bids), Houston-based Peregrine Oil and Gas II (submitted two bids), and UK supermajor BP (submitted one bid).
Ecopetrol submitted the single highest bid for one block, East Breaks 685, at $2.8 million. The block sits just east of Corpus Christi and south of Galveston Island, Texas, in water ranging 800-1600m deep. BP’s sole bid was for Keathley Canyon block 139 for $887,552.
According to the Associated Press, the last time a lease sale this small happened was in 1986. That round brought in $56.8 million.
In comparison, the last lease sale (235) held on 18 March, brought in some $539 million in high bids, although it offered an area almost double in size. In that sale, 7788 unleased blocks, covering about 41.2 million acres, some 3-230nm offshore in water depths ranging 9-11,115 ft (3-3400m) were up for grabs. Lease sale 235 attracted 42 companies that submitted 195 bids on 169 tracts, covering about 923,700 acres.
BOEM Director Abigail Ross Hopper said that the GoM remains a critical component of the US’s energy portfolio. “While this sale reflects today’s market conditions and industry’s current development strategy, it underscores a steady, continued interest in developing deep water federal offshore oil and gas resources.”
She continued: “The continuing drop in oil prices and low natural gas prices obviously affect industry’s short-term investment decisions, but the Gulf’s long-term value to the nation remains high and (President Obama’s) energy strategy continues to offer millions of offshore acres for development while protecting the human, marine and coastal environments, and ensuring a fair return to the American people.”
NOIA President Randall Luthi welcomed the sale, despite the result. Earlier this week, he urged BOEM to continue the sale, after a petition, which called on US Department of the Interior Secretary Sally Jewel to stop the lease sale, had been circulated.
“While disappointing, the results of this lease sale are not surprising and accurately reflect the current environment of low commodity prices and increasing regulatory changes and uncertainty,” he said. “The entire oil and natural gas industry, particularly the offshore segment, is understandably being very cautious about spending money. The companies that did participate in this sale should be appreciated for their faith in a bright energy future and in the potential of the Gulf of Mexico in spite of discouraging market and other conditions.“
He continued: “Today’s lease sale was quick, quiet and small, but it is still a step in the right direction and will create jobs, boost economic activity, and strengthen US energy security.”
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