By KATHY SHIRLEY
GOM's Top Tens:
First Sale Drew 336 Bids
The federal government held its first lease sale
in October 1954 offshore Louisiana. MMS records show 199 tracts
were offered, and 90 received bids. A total $116,378,476 was offered
in high bids and 336 bids were received.
The average price per acre at the sale was $294.84.
The second sale was held just one month later for
offshore Texas, and 19 bids were received on the 38 tracts offered.
Total bonus high bids were over $23 million, and the average price
per acre was $347.84.
The fifth lease sale in federal waters was off Florida’s
coast in 1959 -- an area now off-limits to activity. The government
offered 80 tracts, and 23 bids were received. Total bonus high bids
were $1.7 million, and the average price per acre was $12.92.
-- KATHY SHIRLEY
been alternatively called the Dead Sea and the salvation of domestic
oil and gas production. Either way there is no doubt that the Gulf
of Mexico has been critically important to the petroleum industry
-- and the U.S. consumer -- for over five decades.
How important? A quick look at some Minerals Management
Service statistics tell an impressive tale. For example:
- Cumulative oil production from the Gulf
totals over 13 billion barrels.
- Gas production has reached almost 154
trillion cubic feet.
- A total of 41,188 wells had been drilled
as of Aug. 1, and 1,259 fields have been discovered.
- There are 149 active lease operators
conducting drilling and/or production operations in the region.
- There are 1,884 active companies qualified
to do business in the Gulf, and 400 current leaseholders.
It all started in 1947, when Kerr-McGee made the
first Gulf discovery at Ship Shoal 32, about 10 miles off the Louisiana
coast in 18 feet of water. The firm is credited with setting the
first offshore platform in the Gulf at its new field. Amazingly,
that first oil field is still producing 56 years later -- and it
is not alone. Many of the earliest discoveries in the Gulf are still
producing today. (See GOM's Top Ten Table
Over the years companies have found ways to make
Gulf fields of all sizes commercially viable.
Of course, that was not difficult at the region’s
largest field discovery, which came just two years ago when BP uncovered
the giant deepwater field, Thunder Horse, in the Mississippi Canyon
and Eugene Island areas. The firm estimated reserves at more than
one billion barrels. But even the MO 830 field in the Mobile Bay
area was commercially viable with just 82,384 estimated barrels
of oil equivalent in reserves.
Certainly, the deep water has been the Gulf’s exploration
focus for the last decade, and that’s where many of the largest
fields have been uncovered.
What most people might not know is that the first
discovery in water depths over 1,000 feet came in 1979 at Shell’s
Cognac field in the Green Canyon area.
Since then, 146 deepwater fields have been discovered.
Technology has played an important role in the deepwater
evolution of the Gulf, and one of the more important "new" technologies
has been subsea wells. The first subsea well was drilled in 1966
at the Eugene Island 175 Field, operated by Sinclair Oil. The technology
has continued to expand, and as of today 330 subsea wells have been
drilled in the Gulf.
For those who think the Gulf of Mexico has seen its
heyday, think again. Chris Oynes, regional director of the MMS said
the glass is only now half empty.
According to MMS’ 2000 resource assessment of conventionally
recoverable hydrocarbons in the Gulf, 65 billion barrels of oil
equivalent total reserves have been produced, but 71 billion barrels
of oil equivalent remain.
According to the MMS the undiscovered resource assessment
- For the western Gulf of Mexico, 37 billion
barrels of oil equivalent.
- For the central Gulf, over 92 billion
- For the eastern Gulf, about nine billion
"Of course, our resources estimates are likely to
be revised upwards due to new discoveries in entirely new geologic
frontiers such as deep gas targets on the shelf," Oynes said.
New life for the Gulf of Mexico should not come as
a surprise to anyone. Over the years, just as the region seemed
to be peaking and on the downhill slide, a new geologic province
or rule change by the MMS has regenerated interest and resulted
in important new reserves.
In the 1980s, for example, the MMS instituted area
wide lease sales, which prompted a whole new class of companies
with new ideas to enter the Gulf.
"Area wide sales were the key to attracting smaller
operators in big numbers to the Gulf and taking the province to
that next level of development," Oynes said. "Other areas of the
world, particularly the North Sea, hopes to emulate the success
we have achieved in dramatically increasing the number of companies
active in the Gulf (see August EXPLORER)."
Good Trends for Tomorrow
To say the deepwater has extended the life of the
Gulf is a colossal understatement. The deepwater has yielded some
of the biggest fields ever found in the United States -- at a time
when many believed the glory days of the domestic industry were
The regeneration of the Gulf of Mexico continues
today. In the last few years the potential for deep gas targets
on the shelf has been established and a growing list of operators
are coming back to the shelf to search the frontiers below 15,000
And just as it did early in the deepwater play, the
MMS has taken steps to entice companies to explore for deep gas.
Royalty relief for deep gas from new leases was established a couple
of years ago, and earlier this year the agency announced a proposed
rule that would extend the royalty relief to existing leases.
One provision of the proposed rule is another first
for the Gulf.
"A key element of this proposed rule is that the
royalty relief will be retroactive to the date of the proposed rule,"
Oynes said. "As a result, companies who believe we will pass the
final rule -- and virtually everybody believes that will happen
-- can go ahead and begin drilling programs with the assurance that
the royalty relief will apply to any new deep discoveries."