NGI The Weekly Gas Market Report / NGI All News Access

MMS: Central, Eastern Gulf Lease Sales Draw $546M in Bids

The Mineral Management Service (MMS) said Wednesday's Central and Eastern Gulf of Mexico lease sales yielded more than $546 million in total bids. Record crude oil prices and high natural gas prices led to robust bidding in the two sales, which together could include more than 3.6 Tcf of recoverable natural gas and up to 739 million bbl of recoverable oil, the agency said.

Central Gulf Lease Sale 194, garnered $354 million in high bids from 80 companies with $540 million in total bids. While Eastern Gulf Lease Sale 197 resulted in $6.97 million in total bids. The blocks are located from three to about 210 miles offshore in water depths of four to more than 3,400 meters. MMS estimates the lease sale could result in the production of 276-654 million bbl of oil and 1.59-3.30 Tcf of natural gas.

Sale 194 garnered 651 bids on 428 tracts. "The Department is committed to working with all interested parties to enhance energy development in an environmentally responsible manner in available areas of the Gulf," said Lynn Scarlett, Interior's assistant secretary for policy, management and budget. A total of 4,063 tracts comprising 21.4 million acres offshore Alabama, Louisiana, and Mississippi were offered.

While interest in the deepwater continues, the large number of tracts receiving bids in shallow water is of particular note, the agency said. "We believe this reflects definite industry interest in deep gas in shallow waters, as well as deepwater oil and gas production in response to royalty relief offered by MMS," MMS Director Johnnie Burton explained.

Lease sale 197 received 12 bids on 12 tracts. The 124 unleased blocks in the sale cover more than 714,240 acres and are located from 100 to 196 miles offshore Alabama in water depths of 1,600 to more than 3,425 meters. Estimates of undiscovered economically recoverable hydrocarbons range from 65 to 85 million bbl of oil and 0.265 to 0.34 Tcf of gas.

The highest bid received on a block in the Central Gulf lease sale was $21.2 million, submitted by Stone Energy and Dominion Exploration & Production for West Cameron Area Block 132. The second highest bid received was $20.2 million submitted by Murphy Exploration, Dominion Exploration, Pioneer Natural Resources and Spinnaker Exploration for Mississippi Canyon Block 819. Dominion Exploration submitted the most high bids in the sale with 25 valued at a total of $52.3 million, followed by Focus Exploration with 25 at $10.2 million and Murphy with 23 at $28.1 million.

In the Eastern Gulf lease sale, the highest bid on a block was $2 million submitted by Helis Oil & Gas, Houston Energy and Red Willow Offshore for Lloyd Ridge Block 272. The second highest bid was $1.6 million by Spinnaker Exploration and Dominion Exploration for De Soto Canyon Block 797. Petrobras America Inc. submitted the most high bids with four at $1.65 million, followed by Anadarko with three at $785,000.

©Copyright 2005 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.