Sec. Zinke: Strong GoM lease sale reflects industry optimism

A total of 28 offshore oil and gas companies took part in the latest offshore lease sale offering acreage in the central part of the U.S. Gulf of Mexico.

The Lease Sale 247, first under the Trump administration, garnered $274.8 million in high bids for 163 tracts covering 913,542 acres in the Central Planning Area of the Outer Continental Shelf offshore Louisiana, Mississippi, and Alabama.

A total of 28 offshore energy companies submitted 189 bids. The sum of all bids received totaled $315 million.

For comparison, for the lease sale held in August 2016, only three oil and gas exploration companies took part, submitting a total of $18 million in bids.

The highest bid for a single block in Wednesday’s round came from Shell, which offered $24 million for block 64 in Atwater Valley, beating the bids by Statoil and LLOG which had offered $3.6 million and $1.6 million respectively, meaning that Shell would’ve won if it had submitted $3.7 million.

The second highest bid for a single block came from Statoil at $21 million, followed by Hess at $18 million, Total at $12 million, Chevron at $11 million etc…

Shell and Chevron submitted the highest bids for most block, coming away with 20 blocks each.

Worth noting however, France’s Total has managed to snap up the block which received the highest number of bids – Block 2006 in Garden Banks area of the Gulf of Mexico – beating bids by Statoil, Cobalt, Shell and Chevron.

Gulf critical to U.S. energy security

“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,” U.S. Secretary of the Interior Ryan Zinke said.

“Expanded Gulf production is critical to America’s economic and energy security, and will play a greater role as we move to break our dependence on foreign oil and strengthen the Nation’s energy independence.”

Today’s lease sale, which included all unleased and non-protected areas in the Central Gulf of Mexico Planning Area, is the final to be held in the Gulf of Mexico under the current Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017.

The Department’s Bureau of Ocean Energy Management (BOEM) offered 9,118 unleased blocks, covering 48 million acres, located from three to 230 nautical miles offshore Louisiana, Mississippi, and Alabama, in water depths ranging from nine to more than 11,115 feet (three to 3,400 meters).

“The Gulf of Mexico is one of the most productive oil and gas basins in the world, and its mature offshore and onshore infrastructure supports safe and responsible development of our domestic energy resources,” Secretary Zinke said.

BOEM estimates the lease sale could result in the production of 460 to 890 million barrels of oil, and 1.9 trillion cubic feet to 3.9 trillion cubic feet of natural gas.

Following the sale, each bid will go through a 90-day evaluation process to ensure the public receives fair market value before a lease is awarded, BOEM said.

Offshore provides tremendous benefits

Randall Luthi, president of the U.S. National Offshore Industry Association said he was pleased with the results of the Central Gulf of Mexico lease sale, “which not only reflect an improving offshore oil and gas market, but also optimism for increased opportunities for offshore leasing, exploration and development under the Trump administration.”

He said on Wednesday: “Today’s sale demonstrates that the offshore oil and gas industry remains committed to staying in U.S. waters and underscores the importance of offshore development to the U.S. economy and domestic energy security. The offshore oil and gas industry provides tremendous economic and energy benefits for our nation.

“Over the years, offshore lease sales in the Gulf of Mexico have contributed billions of dollars to the U.S. Treasury ($80 billion between 2005 and 2014) and recently that revenue stream began flowing to Gulf of Mexico states as well. What’s more, the Energy Information Agency (EIA) predicts that U.S. oil production in the Gulf of Mexico will reach record highs in 2017, which will continue to boost Gulf state economies.”

Offshore Energy Today Staff