Recent trends toward deepwater operations and greater participation by independent operators continued at the US Western Gulf of Mexico Lease Sale 177 in New Orleans Wednesday. A total $167,373,613 was bid by 52 companies in 266 offers for 226 of the 3,789 tracts available in that sale.
The bid-on blocks covered some 1.3 million acres off Texas and in deeper waters off Louisiana. The sum of high bids was $153,660,031, up 62% from the last western gulf lease sale a year ago.
�This was a moderately strong sale, the fifth largest Western Gulf Sale in the last 10 years,� said Gulf of Mexico OCS Regional Director Chris Oynes of the US Minerals Management Service.
�The sale was dominated by independent companies, with Union Oil of California [Unocal], Kerr-McGee, Amerada Hess, and CXY Energy posting $63 million of the $153.6 million in high bids,� he said.
The highest bid for a single tract was $10,540,800, submitted by Kerr-McGee Corp. and CXY Energy Offshore Inc. for Garden Banks Block 624. There were no other bids for that deepwater block.
The block receiving the most bids was High Island 197, with five bids. Spinnaker Exploration Co. LLC was the highest bidder, with a $1,155,000 bid.
Only one tract received four bids: High Island 539. Six blocks received three bids each.
High bidders are not necessarily the winners of the blocks. Bids are not final until reviewed by the MMS.
Top 10 participants
Kerr-McGee submitted the most high bids in this sale. Its apparent winning bids, submitted alone and with partners, totaled $16,251,470 for 22 blocks. Kerr-McGee also submitted the largest number of high bids at the last western gulf sale, totaling $33,211,289 on 36 blocks.
Following Kerr-McGee this year was CXY Energy Offshore, whose sum of high bids totaled $13,086,576 on 20 blocks. Shell Offshore Inc. was third on the list, with a total of $4,359,000 for 20 blocks.
Also among the top 10 high bidders were Anadarko Petroleum Corp., Unocal Corp., PanCanadian Gulf of Mexico Inc., Pioneer Natural Resources USA Inc., Spinnaker Exploration Co. LLC, Amerada Hess Corp., and Devon Energy Production Co. LP.
Unocal had the highest total dollar amount of high bids, at $17,616,760. Unocal also was the company that waved the most money, with $18,792,640 exposed on 22 bids.
"There were few majors among the most active participants in this sale," one MMS official noted.
Still in deep water
To no one's surprise, the blocks in more than 800 m of water drew the highest amount of total bids. The deepest block receiving a bid was Keathley Canyon 671, in 2,747 m of water. Texaco Exploration & Production Inc. bid $1,371,456 for that block.
In depths of 0-400 m of water�where royalty is 16 2/3%�129 blocks in 0-200 m of water received bids, and 6 blocks in 200-400 m of water received bids.
The sum of high bids for the 0-200 m category was $46,475,259. The sum of high bids for the 201-400 m category was $1,601,229.
In depths of 400 m or more�where block royalties are 12 1/2%�10 blocks in 400-800 m of water received bids, and 81 blocks in more than 800 m of water received bids.
The sum of high bids for the 401-800 m category was $9,337,674. The sum of high bids for the 800+ category was $96,245,869.
There were 17 bids on 14 8(g) tracts. The 8(g) zone is a 3-mile-wide band that borders Texas' jurisdictional waters. The state and federal governments share royalties in that area.
Companies risked $5,333,818 on those tracts. The sum of high bids was $4,537,251.
Each tract is about 9 square miles.
Last year's Western Gulf of Mexico Lease Sale 174 drew 177 bids from 41 companies bidding jointly or alone on 153 tracts of a total of 3,747 blocks on offer. In that sale, the bidders exposed a total of $104,211,708, and the total of high bids was $94,649,044.