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Gulf of Mexico Lease Sale 251 Attracts More Than $178 Million in High Bids

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On 15 August 2018, the BOEM’s Lease Sale 251 garnered 171 bids for 144 tracts in both shallow and deepwater from a total of 29 companies. According to officials, a total of US$ 178,069,406 was received in high bids. That was an improvement over March 2018’s Lease Sale 250 when a total of US$ 124.7 million was received in high bids for 148 shallow/deepwater tracts from a total of 27 companies. In Lease Sale 251, a total of 118 deepwater tracts received high bids.

Fig 1 - Lease Sale 251 deepwater blocks receiving high bids

Fig 1 – Lease Sale 251 deepwater blocks receiving high bids

ExxonMobil was one of the big winners, picking up 25 deepwater blocks for a total of US$ 40.6 million, mostly in the underexplored Desoto Canyon and Lloyd Ridge protractions, indicating that companies are beginning to show signs of increased interest in more high-risk acreages: remote protraction areas with minimal-to-zero drilling activity or discoveries. BP also bid aggressively, acquiring equity in 19 deepwater blocks for a total of US$ 12.6 million. The highest bid was made by Hess, who bid US$ 25.9 million for the ultra-deepwater block MC 338, adjacent to MC 383, site of the BP-operated Kepler Field (part of the Na Kika production project). The following is a detailed list of high bids for deepwater blocks by company:

  • Anadarko US Offshore LLC (5 high bids) – 1 Mississippi Canyon Block (MC 873); 2 Green Canyon blocks (GC 429 & GC 473); 1 Walker Ridge Block (WR 925); 1 Keathley Canyon Block (KC 815).
  • Beacon Offshore Energy Exploration (2 high bids) – 1 Atwater Valley Block (AT 354 (w/ Houston Energy, CL&F & Red Willow)); 1 Walker Ridge Block (WR 544 (w/ Houston Energy)).
  • BP Exploration & Production Inc (19 high bids) — 6 Viosca Knoll blocks w/ Hess (VK 907, VK 909, VK 951, VK 961 (wo/ Hess), VK 996 & VK 997); 5 Mississippi Canyon blocks (MC 294 (w/ Hess), MC 339 (w/ Hess), MC 936, MC 979 & MC 980); 2 Desoto Canyon blocks (DC 399 & DC 490); 4 Green Canyon blocks (GC 124, GC 365, GC 436 & GC 480); 2 Atwater Valley blocks (AT 10 & AT 47).
  • Chevron USA Inc (5 high bids) – 2 Garden Banks blocks (GB 956 & GB 957); 1 Mississippi Canyon Block (MC 743); 2 Green Canyon blocks (GC 426 & GC 470).
  • Deep Gulf Energy III LLC (5 high bids) – 3 Keathley Canyon blocks (KC 720, KC 764 & KC 814); 1 Mississippi Canyon Block (MC 261 (w/ Ridgewood)); 1 Green Canyon Block (GC 437).
  • Ecopetrol America Inc (4 high bids) – 4 Green Canyon blocks (GC 404, GC 405, GC 448 & GC 492)
  • EnVen Energy Ventures LLC (4 high bids) – 1 Ewing Banks Block (EW 525); 1 Mississippi Canyon Block (MC 239); 2 Atwater Valley blocks (AT 398 & AT 444).
  • Equinor Gulf of Mexico LLC (16 high bids) – 13 Alaminos Canyon blocks (AC 153, AC 154, AC 155, AC 198, AC 199, AC 200, AC 239, AC 240, AC 283, AC 285, AC 286, AC 287 & AC 329); 1 Green Canyon Block (GC 510 (w/ Hess); 2 Atwater Valley blocks (AT 235 & AT 236).
  • ExxonMobil Corp (25 high bids) – 10 Desoto Canyon blocks (DC 891, DC 934, DC 935, DC 937, DC 938, DC 939, DC 978, DC 979, DC 983 & DC 984); 15 Lloyd Ridge blocks (LL 13, LL 14, LL 15, LL 56, LL 58, LL 60, LL 61, LL 63, LL 104, LL 107, LL 151, LL 194, LL 238, LL 239 & LL 240).
  • Fieldwood Energy LLC (2 high bids) – 2 Mississippi Canyon blocks (MC 691 (w/ Houston Energy & Red Willow) & MC 905).
  • Hess Corp (16 high bids) – 9 Viosca Knoll blocks (VK 904, VK 905, VK 907 (w/ BP), VK 909 (w/ BP), VK 948, VK 949, VK 951 (w/ BP), VK 996 (w/ BP) & VK 997 (w/ BP)); 4 Mississippi Canyon blocks (MC 294 (w/ BP), MC 338, MC 339 (w/ BP) & MC 432); 3 Green Canyon blocks (GC 481, GC 510 (w/ Equinor) & GC 686).
  • Houston Energy LP (5 high bids) – 2 Mississippi Canyon blocks (MC 630 (w/ LLOG, Ridgewood & Red Willow) & MC 691 (w/ Red Willow & Fieldwood)); 1 Green Canyon Block (GC 852 (w/ Murphy, Red Willow & DGE); 1 Atwater Valley Block (AT 354 (w/ Beacon, Red Willow & CL&F)); 1 Walker Ridge Block (WR 544 (w/ Beacon)).
  • Shell Offshore Inc (3 high bids) – 1 Garden Banks Block (GB 774); 1 Mississippi Canyon Block (MC 978); 1 Walker Ridge Block (WR 504).
  • Talos Energy Offshore LLC (10 high bids) – 5 Viosca Knoll blocks (VK 72, VK 73, VK 116, VK 117 & VK 867); 1 Mississippi Canyon Block (MC 66); 4 Green Canyon blocks (GC 67, GC 111, GC 235 & GC 411).
  • Total E&P USA Inc (4 high bids) – 2 Garden Banks blocks (GB 871 & GB 872); 2 Mississippi Canyon blocks (MC 828 & MC 872).
Fig 2 - Lease Sale 251 Central & Eastern deepwater GOM bids

Fig 2 – Lease Sale 251 Central & Eastern deepwater GOM bids

 

Fig 3 - Lease Sale 251 Western deepwater GOM bids

Fig 3 – Lease Sale 251 Western deepwater GOM bids

Following the public big opening for Lease Sale 251, National Ocean Industries Association (NOIA) President Randall Luthi issued the following statement, expressing his hopefulness for the future of O&G activity in GOM: “While not a barn burner, Lease Sale 251 tops the previous Gulf sale in terms of increased participation, increased competition for offerings, and bid amounts.  In addition, bidding activity demonstrates both continued interest in deepwater tracts and renewed interest in shallow water tracts.”

Luthi went on to say that the operating environment in the U.S. Gulf of Mexico is showing “tangible” signs of improvement.

“Pointing to an industry that is poised to shift into high gear; oil prices are higher, revisions to overly burdensome regulations are in the works, rig rates and supply chain prices are more competitive, and companies have improved the efficiency of their operations,” he said.

Such optimism was similarly expressed by Gulf Economic Survival Team (GEST) Executive Director Lori LeBlanc.

“The Gulf Economic Survival Team watched today’s OCS lease sale very closely in anticipation of positive indicators around the offshore oil and gas industry,” LeBlanc said. “We are hopeful the offshore industry is holding steady as this represents an increase as compared to the previous lease sale in March 2018.”

Even so, LeBlanc noted with some caution that while “production may be up…jobs are down, vessels are tied up, and our nation needs to adopt policies that will boost offshore activity now more than ever.”

Lease Sale 251 marked the third offshore sale under the National Outer Continental Shelf (OCS) Oil and Gas Leasing Programme for 2017-2022. Under this programme, ten region-wide lease sales are scheduled for the Gulf, where resource potential and industry interest are high, and oil and gas infrastructure is well established. Lease Sale 251 included ~14,474 unleased blocks, located from 5-372km (3-231 miles) offshore, in the Gulf’s Western, Central and Eastern planning areas in water depths ranging from 3-3,400m (9-11,115ft). Excluded from the lease sale were: blocks subject to the congressional moratorium established by the Gulf of Mexico Energy Security Act of 2006; blocks that are adjacent to or beyond the U.S. Exclusive Economic Zone in the area known as the northern portion of the Eastern Gap; and whole blocks and partial blocks within the current boundary of the Flower Garden Banks National Marine Sanctuary. On 21 March 2018, the BOEM’s Lease Sale 250 garnered 159 bids for 148 tracts in both shallow and deepwater from a total of 27 companies. According to officials, a total of US$ 124.7 million was received in high bids. The estimated amount of resources anticipated to be developed as a result of the proposed region-wide lease sale ranges from 0.21-1.12 Bbo and from 0.55-4.42 Tcfg. More information on the lease sale results is available at: https://www.boem.gov/Sale-251/.

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Don Campbell