Central Gulf Sale 235 Attracts $539M in High Bids

Bidding levels for the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) Central Gulf of Mexico Lease Sale 235 were lower than for BOEM’s previous central Gulf Lease Sale, but BOEM officials say Wednesday’s results show steady, continued interest in U.S. Gulf leasing.

Central Gulf of Mexico Lease Sale 235 attracted $538.7 million in high bids and $583.2 million in total bids, down from the $850.8 million in high bids and $1.09 billion in total bids seen in central Gulf Lease Sale 231 in March 2014.

BOEM offered 7,788 unleased blocks covering 41.2 million acres Wednesday, located from 3 to 230 nautical miles offshore in nine feet to over 11,115 feet of water offshore Louisiana, Mississippi and Alabama.  

Forty-two companies submitted 195 bids on 169 tracts, covering approximately 923,700 acres. Deepwater blocks were a focus of bidding, with 64 blocks in more than 5,249 feet of water receiving bids. The deepest block receiving a bid, Lloyd Ridge Block 454, lies in 9,901 feet of water.

Green Canyon Block 364 received the greatest number of bids in the lease sale, followed by Green Canyon 804 and Atwater Valley Block 153.

Houston Energy LP and Red Willow Offshore LLC made the highest bid in the lease sale with their $52.2 million offer for Walker Ridge Block 107. The offer also made it the highest bid per acre of the sale with $9,066/acre.

Shell Offshore Inc., Statoil Gulf of Mexico LLC, Venari Offshore LLC, Chevron U.S.A. Inc., and Exxon Mobil Corp. were the top five bidders in the lease sale, with respective bids of 17, 14, 12, 11, and 11. Chevron, Red Willow Offshore, ExxonMobil, Statoil and PXP Offshore LLC were the top five bidders in terms of high bids.

The agency estimates that the sale could result in between 460 and 890 million barrels of oil production and 1.9 trillion to 3.9 trillion cubic feet of natural gas.

“While this sale reflects today’s market conditions and industry’s current development strategy, it underscores a steady, continued interest in developing these federal offshore oil and gas resources,” said Secretary of the Interior Sally Jewell in a March 18 press statement.

The sale also included 201 blocks located fully or partially within the three statute mile U.S.-Mexico Boundary Area, as well as blocks in the former Western Gap that lie within 1.4 nautical miles north of the Continental Shelf Boundary between the United States and Mexico. These blocks are subject to the U.S.–Mexico Transboundary Hydrocarbon Agreement, which took effect July 18, 2014. None of these blocks received bids.

The influence of oil prices was apparent in Lease Sale 235, but the Louisiana Mid-Continent Oil & Gas Association (LMOGA) believes the Gulf will remain a prominent energy resource for America and will remain so for years to come, not only creating jobs but also economic growth and revenue for the U.S. federal treasury.

“The fact that today’s bids are for deepwater tracts is evidence that industry is still willing to invest in the deepwater Gulf of Mexico for the long term,” said LMOGA President Chris John in a March 18 press statement.

Earlier this week, Alaska’s Department of Natural Resources’ Division of Oil and Gas announced the upcoming Alaska Peninsula Competitive Oil and Gas Lease Sale and Cook Inlet Areawide 2015W Competitive Oil and Gas Lease Sale. Interested participants can bid in-person Monday, May 4 in Anchorage or by mail. The public bid opening will be held May 6.

The Alaska Peninsula Areawide encompasses about 4 million onshore acres and 1.75 million acres of offshore state waters. This acreage includes 1,047 tracts ranging in size from 640 to 5,760 acres. The sale area is located on the northern side of the peninsula, stretching from Nushagak Peninsula in the north to the vicinity of Cold Bay, and lies within the Aleutians East Borough, Bristol Bay Borough, Lake & Peninsula Borough, and the Dillingham Census Area.

The Cook Inlet area covers approximately 4.2 million acres divided into 815 tracts ranging from 640 to 5,760 acres in size. The tracts, located within the Matanuska-Susitna, Anchorage and Kenai Boroughs, are state-owned uplands in the Matanuska and Susitna river valleys generally south and west of Houston and Wasilla, the Anchorage bowl, and the western shore of Cook Inlet from Beluga River to Harriet Point.



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