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Deep water focus of latest record gulf sale

Sept. 1, 1997

Deepwater tracts dominated a strong western Gulf of Mexico offshore lease sale last week in New Orleans. Operators submitted high bids totaling $616,212,499 on 804 tracts in Sale 168. They filed a record 1,224 bids, exposing $939,196,128. Minerals Management Service said that surpassed the 929 bids in western Gulf Sale 161 last year, 1996 (OGJ, Sept. 30, 1996, p. 26). Shell Deepwater Development Inc. again dominated the sale, with apparent high bids totaling $74,185,073 for 154 tracts. Shell

Deepwater tracts dominated a strong western Gulf of Mexico offshore lease sale last week in New Orleans.

Operators submitted high bids totaling $616,212,499 on 804 tracts in Sale 168. They filed a record 1,224 bids, exposing $939,196,128.

Minerals Management Service said that surpassed the 929 bids in western Gulf Sale 161 last year, 1996 (OGJ, Sept. 30, 1996, p. 26).

Shell Deepwater Development Inc. again dominated the sale, with apparent high bids totaling $74,185,073 for 154 tracts. Shell did not win any of the top 10 tracts (see table [14,792 bytes]) but submitted 218 bids in all, exposing $102 million in the process.

BP Exploration was apparent high bidder on 80 tracts for a total of $44,884,855, as was Exxon Corp. on 68 tracts for $62,459,000.

Two thirds of the tracts receiving bids were in more than 800 m of water. A recent law reduces federal royalties for economically marginal fields in deep water.

Operators submitted 603 bids on tracts in more than 800 m of water, 52 bids in 400-800 m, 19 bids in 200-400 m, and 130 bids in waters less than 200 m.

The top tract was a sub-800 m parcel, Garden Banks Block 949, for which Exxon bid $9,113,000. Four other bids were offered for that block.

MMS said one sub-800 m water depth tract received 11 bids.

Robert Stewart, National Ocean Industries Association president, said, "The companies obviously have great confidence in the Gulf of Mexico. This sale has got to portend jobs for the future."

He said operators will be challenged to find rigs to drill their prospects: "We have already seen a number of rigs upgraded to work in deeper water. Most of the rigs that could be upgraded have been or are being upgraded. We're starting to see some new rig construction, and I think we'll see more of it."

Stewart said, "A lot of independents' names were read when they were opening those bids. More and more independents have been bidders at recent sales in the gulf."

An MMS official said that 82 bidders participated in the sale and, "Quite a few names were read that I'd never heard of before."

MMS said it had received "at least one bid" in an area of the western Gulf not covered by a U.S.-Mexico boundary treaty. MMS will hold the bid(s) unopened until the Senate approves a treaty with Mexico.