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Independents dominate Central Gulf of Mexico lease sale; bidders target OCS gas
Petroleum News Alaska
Exploration and production independents were out in force for Central Gulf of Mexico Oil and Gas Lease Sale 185, accounting for the lion’s share of bids and going after natural gas acreage with some of the largest bids seen in years on the U.S. Continental Shelf.
Sale 185, held March 19 in New Orleans, La., drew $315.5 million in apparent high bids from a pool of 793 bids on 561 tracts. That compares to last year’s $363 million in high bids from a smaller pool of 697 bids on 506 tracts.
Two-thirds or 373 of the 561 tracts receiving bids in Sale 185 are situated on the shelf, which typically generates lower bids on the average than deepwater acreage.
Nevertheless, shelf blocks drew the heaviest competition in the sale, as well as some of the largest individual bids, especially in the West Cameron area located offshore Louisiana.
West Cameron adjoining blocks 22 and 23 together drew a sale-high 18 bids, with Newfield Exploration taking Block 23 with a bid of $3.1 million and Unocal winning Block 22 with a bid of $1.2 million bid.
In other areas of the vast continental shelf, Spinnaker Exploration came up with a winning bid of $4.6 million for Vermilion Block 90 and Canada’s Nexen Petroleum’s shelled out $4.8 million for South Timbalier Block 147.
Highest bid in sale on shelf For the first time in recent memory, the shelf also produced the single highest bid in a lease sale: $8.2 million for South Marsh Island Block 109, won by a group led by Hunt Petroleum.
Independents also captured eight of the 10 top slots in terms of total high bids submitted by each company.
Oklahoma’s Kerr-McGee, whose bidding was evenly split between the shelf and deepwater, was the big winner in Sale 185, taking 63 blocks with $28.2 million in apparent high bids.
Other big winners included Newfield Exploration which captured 51 blocks with $12.6 million in bids, followed by BHP Billiton with 50 blocks on $10.5 million in bids, Chevron USA with 41 blocks on $21.7 million in bids, Magnum Hunter with 40 blocks on $8.5 million in bids, Murphy Exploration and Production with 35 blocks on $21.5-mil in bids; Unocal with 27 blocks on $18.7 million in bids; Remington Oil & Gas with 23 blocks on $3 million in bids; Ocean Energy with 22 blocks on $11.5 million in bids; and BP Exploration, 22 blocks on $4.3 million in bids. Large deepwater bids Despite being overshadowed by bidding on the continental shelf, deepwater Central Gulf did attract several large bids. A group made up of Unocal, Kerr-McGee and Ocean Energy coughed up $15.1 million for adjoining Green Canyon blocks 320 and 364, while Chevron USA bid $7.7 million for uncontested Green Canyon Block 468.
MMS had been looking for a strong, gas-focused sale because of the large number of available shelf blocks, strong commodity prices, and projected shortfalls in U.S. natural gas production.
MMS said a large number of blocks bid on in Sale 185 were so-called newly available tracts, or blocks that had been re-offered for leasing after being relinquished by companies. While thousands of shallow and deepwater blocks were made available in the sale, only about 500 were considered newly available.
In total, 412 blocks in Sale 185 received single bids and 149 blocks received multiple bids. One block received 10 bids, one received eight bids, one received six bids, three received five bids, 11 received four bids, 34 received three bids, and 98 received two bids.
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