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GoM Lease Sale 247 draws US$275 million in high bids

Written by  Wednesday, 22 March 2017 12:00

The latest Gulf of Mexico lease sale had 28 companies vying for 163 tracts in a total of 913,542 acres in the Central Planning Area of the Outer Continental Shelf (OCS), bringing in nearly US$275 million in high bids.

Image from BOEM Twitter.

US Secretary of the Interior Ryan Zinke said that the Gulf of Mexico Lease Sale 247 garnered $274.8 million in high bids. A total of 28 companies submitted 189 bids, with the sum of all bids totaling more than $315 million

The Department’s Bureau of Ocean Energy Management (BOEM) offered 9,118 unleased blocks, covering 48 million acres, located from 3-230mi offshore Louisiana, Mississippi, and Alabama, in water depths ranging from 9ft to more than 11,115ft (3-3400m).

The hottest block with the most bids, Garden Banks 1006, went to France’s Total. The French company won with the high bid of $12.6 million against Shell, Statoil, Chevron, and Cobalt International.  

However, Shell walked away with the highest bid on a block, paying $24 million for Atwater Valley 64. Shell was also the highest bidder with a total of 20 bids thoughout the bidding process, and a sum of $55.9 million.

Other high bidders included: Statoil for Walker Ridge 55 at $21 million; Hess Corp. for Green Canyon 287 at $18 million; Total for Garden Banks 1006 at $12.6 million; Chevron for Green Canyon 642 at $11 million.

BOEM estimates that Lease Sale 247 could result in the production of 460-890 MMbbl, and 1.9-3.9 Tcf of natural gas.

Statoil was the high bidder for 13 leases, securing stake in all of the company's main priorities, and marking the reset of its exploration efforts in the US Gulf of Mexico. Of all 13 blocks to be obtained by Statoil, the company secured 100% stake in each.

“The leases awarded reinforce Statoil’s exploration strategy of securing prospective acreage, while taking advantage of the cycle to access these leases at favorable rates in the US Gulf of Mexico,” says Tore Løseth, head of exploration in the US and Mexico.

“The results today are the fruits from taking sufficient time to review lessons from our past exploration campaign, and from thoroughly strengthening our regional subsurface understanding of this area. We continue to believe in the potential of the Gulf of Mexico. Our participation in the lease sale is part of a targeted, step-wise approach to test our play concepts in the area,” says Løseth. 

Following Lease 247's sales, each bid will go through a 90-day evaluation process to ensure the public receives fair market value before a lease is awarded. Lease awards will be posted to BOEM’s website as they are completed.

Secretary Zinke called the Gulf of Mexico one of the most productive oil and gas basins in the world.

“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,” Secretary Zinke said. “In cooperation with the Gulf offshore industry, we are committed to responsible energy development that spurs economic opportunities, generates jobs for American workers, and produces revenues for local, state, and federal partners. 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 (22 March) lease sale marks the final lease sale in the Obama Administration’s Five-Year Program. The first 11 sales offered nearly 73 million acres for development and garnered more than $3 billion in bid revenues. The lease sale, announced in December, was livestreamed from New Orleans. 

As of 1 March 2017, about 16.9 million acres on the US OCS are under lease for oil and gas development (3194 active leases) and 4.6 million of those acres (929 leases) are producing oil and natural gas. More than 97% of the leases are in the Gulf of Mexico; about 3% are on the OCS off California and Alaska, according to BOEM.

National Ocean Industries Association (NOIA) President Randall Luthi said that he was pleased with the results of the lease sale, which reflect an improving offshore oil and gas market.

“Today’s sale demonstrates that the offshore oil and gas industry remains committed to staying in US waters and underscores the importance of offshore development to the US economy and domestic energy security. The offshore oil and gas industry provides tremendous economic and energy benefits for our nation,” Luthi said. “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.”

Earlier this month, US Department of the Interior (DOI) announced its first lease sale under the Trump Administration’s new Outer Continental Shelf Oil and Gas Leasing Program for 2017-2022, Lease Sale 249, will be held on 16 August. It will offer 73 million acres in the Gulf of Mexico, offshore Texas, Louisiana, Mississippi, Alabama, and Florida.

Past Gulf of Mexico lease sales

Looking back at prior lease sales, today's lease sale went much better. 

Lease Sale 248, BOEM’s first-ever online lease sale held in August 2016, only received bids for 24 of 4399 blocks, for a total of just over $18 million. The 24 tracts included in the offer, cover 138,240 acres in the Western Gulf of Mexico Planning Area.

At this time last year, on 23 March 2016, BOEM held two GoM lease sales, Lease Sale 241 and Lease Sale 226. Both failed to impress.

Lease Sale 241 garnered about $156 million in high bids, which offered 128 tracts covering 693,962 acres of the Outer Continental Shelf offshore Louisiana, Mississippi and Alabama.A total of 30 oil and gas companies submitted 148 bids for Sale 241, with a sum of all bids received coming in at more than $179 million. However, Lease Sale 241 fared better than August 2015’s Lease Sale 246, which only collected $22.7 million for 33 tracts, covering 190,080 acres.

Lease Sale 226 received zero bids, which included 162 whole or partial unleased blocks and covering 595,475 acres in the Eastern Planning Area. The blocks are 125mi offshore in 2657-10,213ft water depth. The area is south of eastern Alabama and western Florida; the nearest point of land is 125mi northwest in Louisiana.

Read more:

US unveils Lease Sale 249

BOEM offers 48 million acres in Central GoM

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