Record-level interest in Gulf’s first post-spill sale

Twenty companies submitted 191 successful bids totaling $337.7 million in the first oil and gas lease sale in the Gulf of Mexico since the Deepwater Horizon explosion and oil spill last year.

The Gulf is divided into three managed regions, and companies purchase tract leases, which they can then explore and develop, provided they secure permits. The sale, hosted by the Department of the Interior at the Mercedes-Benz Superdome last Wednesday, offered 3,913 tracts encompassing 21 million acres in the western Gulf.

In total, the participating companies offered up $712.7 million, the highest sum of total bids during the current 2007-12 sales cycle in the western Gulf, according to figures from the Bureau of Ocean Energy Management.

Last week’s sale was the fourth in the western Gulf during the cycle, and the first in any Gulf region since new federal regulations were implemented during a months-long moratorium, and what critics called an even longer “permitorium”, on deep-water drilling after the BP-leased Macondo well blew out in April 2010.

Companies who owned leases prior to the spill were allowed to return to work in October 2010, but the first post-spill deep-water permit was not issued until February 2011.

The Louisiana Mid-Continent Oil and Gas Association is a trade association that represents all sectors of the oil and gas industry in Louisiana and the Gulf. Chris John, the association’s president, said the total bid sum is a good “barometer of activity and interest in the Gulf.”

“The fact that we had the kinds of bids we had is a testament to the resilience of this industry and the fact that we’ve been able to meet the challenges of all these new requirements,” he said.

The high-bids total of $337.7 million ranks second behind a western Gulf sale in August of 2008. The last lease sale, held in March 2010 in the central Gulf, attracted a total bid sum of $1.3 billion and high bid sum of $949.3 million.

Conoco Phillips submitted the highest bid in the western Gulf since the 2007-12 schedule began, a $103.2 million investment in the Keathley Canyon.

The last time a company bid a higher amount was Anadarko’s $105.6 million investment in the central Gulf’s Green Canyon in March of 2008.

In total, the global company placed 75 high bids totaling $157.8 million, both of which were highs at last Wednesday’s sale.

Conoco Phillips, which spent 46.7 percent of the total high bids, did not respond to a message left with its media relations department.

BP, the principal owner of the Macondo Prospect well that gushed up to 4.9 million barrels of crude oil into the Gulf last year, participated in the sale. BP’s largest three purchases were in Keathley Canyon, with costs ranging from $4.9 million to $7.1 million.

The company was successful with 11 bids, the fourth most for all companies, and spent $27.5 million in total, which also ranked fourth.

The Department of Interior hasn’t scheduled the next lease sale, which will offer properties in the central Gulf, but it expected to hold the sale sometime next year before the current cycle expires, John said.

The last lease sale in the central Gulf, one month before the Deepwater Horizon disaster, commanded $1.3 billion in total bids and $949.3 million in successful bids.

John said the “future of the Gulf is bright,” and the sale exceeded his expectations.

“Traditionally, the western Gulf is a little low because it’s a very mature part, we’ve been drilling there since the 40s,” John said. “But I was very encouraged. Even if it were way less than ($712.7 million), I think the fact that we had a lease sale, the first one since the Macondo blowout, I think is a huge milestone for the industry and Louisiana.”

Interior Secretary Ken Salazar said the “Gulf is back to work,” after a year and a half of speculation and regulation following the Deepwater Horizon disaster.

“We have lived through what was one of the most significant national crises that we have faced in the last century,” Salazar said at a press conference, as quoted by WWL-TV. “We have stood the oil and gas industry back up here in the Gulf of Mexico.”