$1.2B central Gulf lease sale was ‘solid’ result

Graveyard’s history sparks a monumental question
March 26, 2013
Concerns raised over ballot issue
March 26, 2013
Graveyard’s history sparks a monumental question
March 26, 2013
Concerns raised over ballot issue
March 26, 2013

The federal government collected $1.2 billion in high bids through the central Gulf of Mexico lease sale last week as exploration companies laid claim to drill for subsea energy.

That figure ranks fourth of the six central Gulf sales held since 2007, and the 7,299 blocks up for bid ranked second. Fifty-two companies participated in the auction, the lowest number over the last six central Gulf sales.

“This is a solid lease sale that illustrates the continued importance of the Gulf of Mexico to America’s energy future,” said Chris John, president of the Louisiana Mid-Continent Oil and Gas Association.

In total, the companies entered 407 bids worth $1.6 billion on 4.4 percent of blocks made available. Shell Offshore won 38 bids, the most of any company, worth $139.8 million, and Exxon Mobil spent $220.3 million in total, the most money.

The last lease sale in the central Gulf, in June 2012, commanded 593 bids worth $2.6 billion on 6.1 percent of blocks made available.

At the March 20 sale, Statoil and Samson Offshore combined to enter an $81.8 million bid on a block in Walker Ridge, the highest bid overall. Statoil was also the highest individual bidder at the central Gulf 2012 sale.

“Walker Ridge 271 was our number one priority lease and we are very pleased to have placed the highest bid on this impact prospect that we call Monument,” said Erik Finnstrom, Statoil in North America’s senior vice president of exploration, in a news release.

Seven of the top 10 bids were placed on tracts in 1,600-feet-deep waters or more.

The Bureau of Ocean Energy Management, under the Department of the Interior, conducts the lease sales based on the Interior’s five-year schedule. Last week’s central Gulf sale was the second of 12 Gulf sales planned from 2012-17. Three more are scheduled for Alaskan waters.

“(The) sale reflects strong, continuing industry interest in the Gulf of Mexico,” said Interior Secretary Ken Salazar in a release. “Developing public energy resources in the Gulf of Mexico is good for the Gulf’s economy, and reflects President Obama’s commitment to expand oil and natural gas production safely and responsibly, reducing our dependence on foreign oil, and supporting American energy jobs.”

BOEM, which has the authority to finalize the sales, will review each high bid and compare the winning totals to fair market value.

Five months ago, the western Gulf sale brought in $133.7 million in high bids.

Another sale in the western Gulf is planned for this year, and next year should give companies the chance to bid on blocks in the eastern, central and western Gulf.

Industry stakeholders took the opportunity to prod the Obama administration to add more sales to the schedule and offer more clarity on tightened regulations handed down following the Deepwater Horizon disaster in 2010.

“It is essential that this administration take advantage of the Gulf of Mexico’s ability to provide needed revenue by doing all it can to establish the regulatory clarity needed to let our industry flourish,” said Lori LeBlanc, executive director of the Gulf Economic Survival Team, an organization based in Thibodaux that promotes the importance of Gulf of Mexico-derived energy.

John, of LMOGA, said the oil and gas industry provides a $77.3 billion economic impact on the state and supports more than 300,000 jobs.

“Today’s sale will help develop new resources,” he said last week. “but opening up new areas of the (Outer Continental Shelf) for drilling opportunities is critical to securing America’s energy future.”

This March 9, 2010 file photo shows a tanker truck passing the Chevron oil refinery in Richmond, Calif. Chevron was one of the top bidders on last week’s central Gulf lease sale.