While depressed oil prices dampened enthusiasm in a US federal offshore oil and gas lease sale for the US Gulf of Mexico, the auction did draw interest from 27 companies, with most of the high bids for tracts in deepwater and ultra-deepwater
Continued interest in deepwater and ultra-deepwater fields in the US Gulf bodes well for future spending and the long-term prospects for OSVs, specialised vessel owners and drilling contractors.
US Department of Interior deputy assistant secretary for land and minerals management Andrea Travnicek said the region-wide Gulf of Mexico Lease Sale 253 generated US$159,386,761 in high bids on 151 tracts, 117 of which were either in deepwater (800-1,600 m) or ultra-deepwater (over 1,600 m).
The highest bid was US$22.5M for Block 124 in deepwater in the Green Canyon area in the Gulf of Mexico submitted by BHP Billiton Petroleum (Deepwater) Inc. Australia’s BHP operates two fields in the Gulf of Mexico – Shenzi (44% interest) and Neptune (35% interest) and holds non-operating interests in two other fields – Atlantis (44% interest) and Mad Dog (23.9% interest).
National Ocean Industries Association (NOIA) vice president of communications and member development Nicolette Nye said the “somewhat modest results of lease sale 253 reflect the cautiously optimistic attitude of an offshore industry still in recovery.”
The price of West Texas Intermediate (WTI) crude oil has dropped almost 19% since it closed at US$69.71 in August 2018. WTI closed at US$56.24 on 19 August 2019 amid the ongoing trade war between the US and China and rising geopolitical tensions in the Middle East.
Ms Nye added, “While companies have improved the efficiency of their operations and rig rates and supply chain prices are more competitive, oil prices remain flat. Bidding activity today may reflect the slower than desired improvement in prices. There is also uncertainty surrounding pending regulatory actions such as financial assurance and fair market valuation.”
NOIA’s 250 member companies support offshore energy development in the US in marine logistics and transportation, oil and gas production, shipbuilding and rig fabrication, marine engineering and geophysical survey.
The Trump Administration’s take on the results of the lease sale was more upbeat than NOIA’s. “The total from today’s lease sale and the March sale is the highest since 2015 for high bids,” said Ms Travnicek. The US federal lease sale in March drew high bids totalling US$244.3M on 227 tracts.
Top 10 companies based on sum of high bids submitted
|Company||Total high bids||Sum of high bids|
|BHP Billiton Petroleum (Deepwater) Inc||20||US$41,849,104|
|Anadarko US Offshore||14||US$23,403,070|
|Equinor Gulf of Mexico||23||US$16,810,848|
|BP Exploration & Production||21||US$14,685,972|
|Shell Offshore Inc||7||US$11,367,028|
|Total E&P USA||4||US$4,944,828|
|EnVen Energy Ventures||5||US$2,945,000|
|Kosmos Energy Gulf of Mexico Operations||4||US$2,135,148|