Shell Offshore leads way in more-active US central gulf lease sale

Bidding activity and total value climbed in central Gulf of Mexico Lease Sale 247 following years of declining offshore interest that dates back before the downturn in oil and gas prices.

Bidding activity and total value climbed in central Gulf of Mexico Lease Sale 247 following years of declining offshore interest that dates back before the downturn in oil and gas prices.

The US Bureau of Ocean Energy Management received 189 bids on 163 blocks from 28 companies at its latest auction in New Orleans on Mar. 22. The sum of high bids was about $275 million.

The last central gulf auction, Lease Sale 241 in 2016, drew 148 bids on 128 blocks from 30 firms. High bids totaled $156 million (OGJ Online, Mar. 23, 2016).

As with last year’s sale, Shell Offshore Inc. led all firms in sum of apparent high bids. The firm won 20 bids amounting to $55.9 million, including the single highest apparent bid of $24.1 million on Atwater Valley Block 64 as well as $5.1 million on Mississippi Canyon Block 845.

Statoil Gulf of Mexico LLC placed second in both sum of apparent high bids and highest single bids. The Norwegian firm counted 13 apparent high bids totaling $44.5 million, including $21.2 million on Walker Ridge Block 55 and $11.1 million on Walker Ridge Block 189.

US independent Hess Corp. was third in sum of apparent high bids and highest single bids. With 12 high bids, it’s slated to shell out $43.9 million, including $18.3 million on Green Canyon Block 287 and $6.8 million for Green Canyon Block 72.

Chevron USA Inc. also tallied 20 apparent high bids but with total value of $35.6 million. Its highest winning bid was $11.3 million on Green Canyon Block 72. Fellow US supermajor ExxonMobil Corp. made 19 apparent high bids totaling $21.9 million, including $5.3 million on Green Canyon Block 250.

Anadarko US Offshore Inc., another US independent, counted 16 apparent high bids amounting to $18.9 million, including $5.1 million on Mississippi Canyon Block 41. Another notable European participant, Total E&P USA Inc., made the fourth-highest single bid of $12.6 million on Garden Banks Block 1006. The French supermajor won 4 bids totaling $15 million.

Of the 163 blocks receiving bids, 76 targeted blocks in 800-1,600 m of water and 48 targeted blocks in more than 1,600 m of water. Garden Banks Block 1006, taken by Total, garnered the most interest with 5 bids overall.

Transitioning between administrations

Lease Sale 247, the 12th and final gulf sale under the Obama administration’s Outer Continental Shelf leasing program for 2012-17, offered more than 48 million acres offshore Louisiana, Mississippi, and Alabama, encompassing all available unleased areas in the central planning area (CPA).

It covered 9,118 blocks 3-230 miles offshore in 9-11,115 ft of water. The first 11 sales in the 5-year program offered nearly 73 million acres for development and netted more than $3 billion.

“Today’s strong sale reflects continued industry optimism and interest in the gulf’s Outer Continental Shelf, a keystone of the nation’s offshore oil and gas resources and a vital part of President Trump’s plan to make the United States energy independent,” commented newly confirmed US Sec. of the Interior Ryan Zinke.

Before the event, Randall Luthi, president of the National Ocean Industries Association, noted results of the sale “may surprise” given higher oil and gas prices and the presence of “a new administration that better understands the strategic importance of a strong oil and gas industry.”

Activity for central and western gulf sales has been tapering off in recent years. Last August’s lackluster western planning area Lease Sale 248 received just 24 bids on 24 blocks from three firms with a sum of high bids totaling $18 million (OGJ Online, Aug. 24, 2016).

Given the dwindling offshore interest, BOEM combined the central, western, and eastern sales into region-wide US gulf Lease Sale 249 scheduled for August (OGJ Online, Mar. 6, 2017). The proposed sale would cover 13,725 unleased blocks 3-230 miles offshore in 9-11,115 ft of water. It would be the first of 10 region-wide gulf lease sales under the new OCS program for 2017-22. Two gulf lease sales are planned to be held each year.

Contact Matt Zborowski at matthewz@ogjonline.com.

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