Gulf lease sale yields $539 million in high bids

The Bureau of Ocean Energy Management (BOEM) oil and gas lease sale for the Central Gulf of Mexico drew $539 million in high bids yesterday. The bids were for tracts on the U.S. Outer Continental Shelf offshore Louisiana, Mississippi and Alabama.

A total of 42 offshore energy companies submitted 195 bids on 169 tracts, covering about 923,700 acres. The sum of all bids received totaled $583,201,520.

The results of the sale were disappointing but not unexpected. Referring to low oil prices and the glut of shale production, Secretary of the Interior Sally Jewell said, “While this sale reflects today’s market conditions and industry’s current development strategy, it underscores a steady, continued interest in developing these federal offshore oil and gas resources.” BOEM Director Abigail Ross Hopper added “the recent drop in oil prices and continued low natural gas prices obviously affect industry’s short-term investment decisions … “

The disappointing results, the worst since 1986 when only 129 bids were received in a Central Gulf offering, included no bids on 201 blocks located within the U.S.-Mexico Boundary Area created in June of last year. The largest block of bids was for deepwater acreage, with a strong interest in the Lower Tertiary. Chevron, Shell, ExxonMobil and Statoil were the most active bidders.

Lease Sale 235 offered 7,788 unleased blocks, covering about 41.2 million acres, located from three to 230 nautical miles offshore in water depths ranging from 9′ to more than 11,115′ (3 m to 3,400 m). BOEM estimates the sale could result in the production of 460 million bbls. to 890 million bbls. of oil, and 1.9 trillion cu. ft. to 3.9 trillion cu. ft. of natural gas.

The lease sale also included 201 blocks located, or partially located, within the three-statute-mile U.S.-Mexico Boundary Area, as well as blocks within the former Western Gap that lie within 1.4 nautical miles north of the Continental Shelf Boundary between the U.S. and Mexico. These ares are subject to the terms of the U.S.-Mexico Transboundary Hydrocarbon Agreement which took effect on July 18, 2014. None of those blocks received bids today.

Statistics for Lease Sale 235 are available at  http://www.boem.gov/Sale-235/ or at www.boem.gov.

— Correspondent Bill Pike contributed to this report

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