The Bureau of Ocean Energy Management (BOEM) opened the Gulf of Mexico Western Planning Area Lease Sale 238 in New Orleans on 20 August 2014, offering 21.6 million acres for oil and gas exploration and development offshore Texas.
The sale attracted more than US$109.9 million in high bids for 81 tracts covering 433,823 acres on the US Outer Continental Shelf.
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| Lease Sale Map – Bid Distribution. From BOEM |
All of the areas offered up for bid in the Western Gulf of Mexico planning area are unleased and non-protected, including 4026 tracts from 9-250mi. off the coast, in depths ranging from 5-3346m.
BOEM estimates the lease sale could result in the production of 116-200MMbbl and 538-938 Bcf of natural gas.
At the close of bidding, 14 offshore energy companies had submitted 93 bids including BP and Shell.
BP was the highest bidder based on total number of high bids, submitting 27 out of 32 bids submitted, at $22,837,729
BP told OE that the company is very pleased at the prospect of adding new leases in the deepwater Gulf of Mexico and extending BP’s industry-leading acreage position in the key US offshore region.
BP went on to say its participation in the lease sale further underscores its commitment to the Gulf, where the company is the largest energy investor.
BP was just cleared to enter contracts with the US government including deepwater leases in the Gulf of Mexico in March 2014 following the Deepwater Horizon accident and oil spill.
Shell had the highest bid for one block, the Alaminos Canyon Block 902, offering $1.75 million.
“The Gulf of Mexico is a major production area in the US, accounting for almost 50% of our oil and gas production in the country. We look forward to building on our long, successful history there,” says Mark Shuster, Shell executive vice president exploration.
The bidding on only one block was a strategic move by Shell.
Shell says they are continuing to build upon a strong position in the Perdido fold belt by adding to its portfolio one strategically located block. The acquisition of this key block strengthens Shell’s existing position in Perdido, where to date Shell has drilled 11 exploration and appraisal wells, and have current production coming from 14 wells in the Tobago, Silvertip and Great White ultra-deepwater fields.
Other top bidding companies include BHP Billiton Petroleum, ConocoPhillips, Venari Offshore, Chevron and ExxonMobil.
The National Ocean Industries Association (NOIA) says it was not expecting the Western Gulf Lease Sale 238 to fetch the eye=popping bids that it did.
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Active Leases and Bids Received Map. From BOEM |
“Today’s sale demonstrates the continued commitment of the US oil and natural gas industry to invest hard to find exploration dollars in areas that have been sold and resold again,” says NOIA President Randall Luthi. “With so many other countries opening up new promising areas, it is a testament to the oil and gas industry that so many have decided to try and keep jobs and investment here at home.”
NOIA added that this sale allowed many of the smaller exploration and production companies to successfully compete for leases in both deep and shallow water.
At the lease sale, 167 of the blocks available for lease were located or partially located within three statute miles of the maritime and continental shelf boundary with Mexico. The leases issued on these blocks are subject to the terms of the US-Mexico Transboundary Hydrocarbon Reservoirs Agreement. The lease sale resulted in 24 of those blocks receiving bids.
The US Department of the Interior (DOI) says the terms in the lease include measures to protect the environment, protect biologically sensitive features, as well as provide trained observers to monitor marine mammals and sea turtles to ensure compliance and restrict operations when conditions warrant.
DOI adds that the terms include a range of incentives to encourage diligent development and ensure a fair return to taxpayers, including an increased minimum bid for deepwater tracts, escalating rental rates, and tiered durational terms with relatively short base periods followed by additional time under the same lease if the operator drills a well during the initial period.
Each bid placed will go through BOEM’s strict evaluation process to ensure the public receives fair market value before a lease is awarded.
Lease Sale 238 is the sixth offshore sale under the Administration’s Outer Continental Shelf oil and gas leasing program for 2012-2017 (five-year program). The first five sales in the five-year program offered more than 60 million acres for development and garnered more than $2.3 billion in bid revenues.
Read more:
US$850 million offered in GOM block sale
BP cleared to enter GoM contracts
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