Eastern sale notable
Gulf Tracts Attract Premium Bids
Two federal sales of offshore hydrocarbon leases in the eastern and central Gulf of Mexico garnered more than $3.7 billion in high bids in March, according to the U.S. Minerals Management Service (MMS), which conducted the sales.
In fact, Sale 206 in the central Gulf attracted $3.67 billion, which set a record for high bids since area-wide leasing initially began in 1983. The sale received 1,057 bids from 85 companies on 615 tracts.
Eastern Gulf Sale 224 garnered 58 bids from six companies on 36 tracts, yielding $64.7 million in high bids.
It is noteworthy that these sales inaugurated enhanced revenue sharing with oil and gas producing Gulf states, along with higher royalty rates, indicative of the region’s vital role in the nation’s energy supply.
The more-than-7,000 leases in the Gulf account for 25 percent of the United States’ domestic oil supply and 15 percent of domestically produced natural gas, the MMS noted. More than 30,000 jobs are directly related to Gulf energy exploration and production.
Central Gulf Sale 206 offered 5,569 tracts comprising approximately 29.8 million acres in federal areas offshore Louisiana, Mississippi and Alabama. The lease area occurs between three and 230 miles offshore in water depths ranging from close to 10 feet to more than 11,200 feet.
About 34 percent of the tracts that attracted bids in Sale 206 are in ultra-deep water greater than 5,249 feet, MMS reported. Lloyd Ridge Block 286 in slightly more than 10,000 feet of water was the deepest tract to receive a bid.
The top bid received for a block was $105,600,789, proffered for Green Canyon Block 432 (see accompanying figures, left). The bid was submitted by Anadarko, Murphy E&P (USA) and Samson Offshore.
The MMS asserted the high level of industry interest in the deepwater and ultra-deepwater areas of the central Gulf is being sustained by the information gained through new discoveries and the advancements in deepwater technology.
Eastern Gulf Sale 224 comprises 118 whole or partial unleased blocks spread over 546,971 acres in the Eastern Planning Area. The acreage occurs south of the Florida Panhandle and west of the Military Mission Line in water depths that range between 2,657 feet and 10,213 feet.
Sale 224 is historic in a sense in that it’s the first sale where the revenue sharing provisions of the Gulf of Mexico Energy Security Act of 2006 begin immediately, according to the MMS.
Producing Gulf states Alabama, Mississippi, Louisiana and Texas will share in 37.5 percent of the high bids on whole and partial blocks in the Eastern Planning area. These four states also will share in 37.5 percent of all future revenues generated from the acreage leased in March in the Eastern Planning Area. No royalty relief will be issued with the leases.
For the central Gulf Sale 206, the royalty rate for blocks in all GoM water depths is increased to 18.75 percent from 16.66 percent.
The new revenue sharing provision will provide funds to help the four Gulf producing states meet the educational, environmental and infrastructure needs of their communities, according to Randall Luthi, director of the MMS.
Lease Sale 224 is the only sale scheduled for the eastern GoM under the current Five Year Outer Continental Shelf Oil and Gas Leasing Program. The acreage included in Sale 224 was last available for lease in 1988.