MMS Lease Sale 213 attracts $949 million in apparent high bids

March 22, 2010
Apparent high bids totaling just over $949 million were offered 468 tracts in the central Gulf of Mexico at Lease Sale 213, reported the US Department of the Interior's Minerals Management Service Mar. 17 in New Orleans.

Apparent high bids totaling just over $949 million were offered 468 tracts in the central Gulf of Mexico at Lease Sale 213, reported the US Department of the Interior's Minerals Management Service Mar. 17 in New Orleans. This total was up from last year's central gulf sale, Lease Sale 208, which attracted $703 million in apparent high bids (OGJ, Mar. 23, 2009, p. 28).

MMS received 642 bids totaling about $1.3 billion from 77 companies at the sale. The tracts offered cover more than 2.4 million acres off Louisiana, Mississippi, and Alabama.

The highest bid received on a tract was $52.56 million submitted by Anadarko E&P Co. LP and Mariner Energy Inc. for Walker Ridge Block 793. There was a three-way tie for blocks receiving the greatest number of bids: 6 bids each were received for Keathley Canyon Blocks 62, 76, and 77.

Lars Herbst, MMS Gulf of Mexico regional director, said, "The bidding activity at today's sale speaks to the future of deepwater gulf in providing vital energy production for the nation. There was also an increase in interest in shallower waters that offers deep gas potential, which is encouraging."

Both the shallow and ultradeep waters were big draws at the sale. Of the tracts receiving bids, 151 blocks lie in less than 200 m of water, which represented 32% of all tracts receiving bids, an increase of 5% from last year's central gulf sale, Herbst noted. Also of the tracts receiving bids, 82 blocks lie in 800-1,600 m of water, 37 lie in 1,600-2,000 m of water, and 141 lie in water greater than 2,000 m.

The top five companies based on the total number of high bids submitted were Maersk Oil Gulf of Mexico Two LLC, 63 bids, $97,315,497; Anadarko E&P Co. LP, 48 bids, $127,593,668; Chevron USA Inc., 46 bids, $79,474,221; Mariner Energy Inc., 45 bids, $62,807,909; and BHP Billiton Petroleum (Deepwater) Inc., 32 bids, $41,508,237.

Company results

Norway's Statoil ASA reported it was the highest bidder on 20 leases in the sale. "The lease sales are important events for us to high-grade our portfolio and to acquire new promising acreage," said Helen Butcher, Statoil exploration manager for the US Gulf of Mexico.

"This year we have concentrated our efforts in and around areas where we already have promising exploration leads and prospects," she said.

Statoil is now one of the largest leaseholders in the deepwater gulf, the company said. Four projects are scheduled to be sanctioned this year including the Chevron Corp.-operated Jack and St. Malo developments.

New Orleans-based McMoRan Exploration Co. reported it was the highest bidder on 17 tracts. The company's bids totaled $9.4 million. If awarded its latest bids, McMoRan's lease acquisitions would add about 75,000 gross acres to its leasehold inventory, which currently is about 1 million gross acres, including 140,000 gross acres associated with the ultradeep gas play, the company said.

James R. Moffett, McMoRan's co-chairman, said, "We are pleased with the results of this important lease sale which significantly expands our leading ultradeep acreage position and enables us to build upon our recent success. The 59% increase in bids for [OCS] tracts compared with the year-ago lease sale is consistent with our view that there is significant hydrocarbon potential in shallow water at deeper depths."

Moffett said, "After giving effect to McMoRan's apparent high bids, our ultradeep acreage exceeds 200,000 gross acres and encompasses multiple prospects with multitrillion cubic feet of hydrocarbon potential."

API feedback

"The oil and natural gas industry stands ready to invest in America and create additional new jobs, as evidenced by its strong bidding during the Central Gulf 213 lease sale, in which the industry was able to bid on parcels in several new areas," said American Petroleum Institute Pres. and Chief Executive Officer Jack Gerard in a statement after release of the sale's preliminary results.

Gerard said, "The US government could replicate this success by providing leasing opportunities in unexplored areas of the [OCS]—like offshore Virginia, the eastern Gulf of Mexico, and the Chukchi and Beaufort Seas off Alaska. Allowing new leasing—a move supported by 63% of Americans, according to recent polling by the Pew Center—could help rejuvenate the struggling American economy, bringing in much-needed government revenues, creating new jobs, and providing the energy we need for future economic growth."

Gerard added that this approach was "highly preferable" to imposing higher taxes on the industry, "which could stifle energy production, revenues, and job growth."

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