Sign of the Times: 208 Central GOM Lease Sale Sees Diminished Bids

Lease 208: Central GOM
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Drastically lower than what the 206 Central Gulf of Mexico Lease Sale netted just one year prior, today's lease sale was stymied by markedly lower oil prices and a new US administration that is striving to increase taxes for petroleum companies operating in the country. While revenues collected from the lease sale will be less than stellar, US Interior Secretary Ken Salazar stressed the country's need for "energy independence."

"Today's lease sale will help us make a wise addition to our nation's energy supply," Salazar said. "The responsible energy development resulting from today's sale will be a part of our nation's comprehensive energy plan, which will include a renewed emphasis on conservation and an aggressive effort to develop our renewable energy resources, so we can move our nation toward energy independence."

In February 2008, the new administration submitted a budget proposal that rescinded long-standing tax breaks for oil and gas companies drilling in the country. Covering intangible drilling costs, the tax breaks are expected to net the US Treasury an additional $31.5 billion. Critics of the proposal claim that smaller independent oil and gas companies are those that will be hurt by the change.

Adding It Up

The Central GOM Oil and Gas Lease Sale 208 held today in New Orleans netted $703,048,523 in high bids, according to a statement from the US Department of the Interior. Conducted by the MMS, the sale attracted 70 companies, which submitted 476 bids on 348 tracts offshore Louisiana, Mississippi and Alabama. The total of all bids received was $933,649,315.

In contrast, the Central GOM Lease Sale 206 held in March 2008 saw high bids of $3,677,688,245 -- the highest amount in US history. Last year, the lease sale received 1,057 bids from 85 companies on 615 blocks in the same area.

Today's lease sale, in turn, netted only 45% of the bids that were received last year and $2.9 billion less in high bids. While this year super-major Shell out bid the lot with nearly $154 million in high bids; last year, Hess stole the show with the highest dollar amount of high bids in the 206 lease sale with almost $438 million.



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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Barry Z. | Mar. 19, 2009
I really think the Gov. is losing its mind. The best way to get this country going, is to get our oil fields back to work. They have many high paying jobs. And people, we will never be able to do with out oil. And as for as taxing Big oil, that won't do anything but hurt us more, not to say they will just pass the tax on to us. An the Gov. knows that. So why don't the people of this country wake up. The gov. is taxing us no one else. Let's give them reasons to drill to keep our people working, not take the work from us.

Mars Freudenberg | Mar. 19, 2009
If some of these oil fields are outside the 12 mile territorial waters of the U.S., they are technically international waters, correct? Why would the oil companies have to pay the Govt. to lease these fields? Just curious since I'm not really in the oil biz.

Don Braithwaite | Mar. 19, 2009
I think we need to get the rigs drilling in the USA and get the roughnecks back to work so we can all live again, instead of just getting by. I understand you don't want to drill in the state parks but we have the technology to stay on the out side and still drill under them. So put the rigs back to work!

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