Sign of the Times: 208 Central GOM Lease Sale Sees Diminished Bids
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In February 2008, the new administration submitted a budget proposal that rescinded long-standing tax breaks for oil and gas companies drilling in the country.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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