The annual Central Gulf of Mexico lease sale, considered a leading barometer of the energy industry’s exploration and production efforts, drew a healthy response Wednesday in New Orleans, with the Minerals Management Service receiving bids totaling $505,468,501. The 547 blocks, located off the coasts of Louisiana, Mississippi and Alabama, drew bids from 90 companies – a 60% higher response than last year.

MMS’ Sale 178 attracted 780 bids on 547 tracts, and the total of all bids was $663,406,963. Last year, MMS received 469 bids on 344 blocks with total bidding approximately $300 million. While this year’s sale amount was high, the record was set in 1997 when more bids were available — 1,790 bids were put up on 1,032 tracts for $824.1 million.

More than half of the bidding, about 64%, was concentrated in the shallow water, with 338 tracts in less than 200 meters of water receiving 502 bids with total bidding of $227.654 million. Each block is approximately nine square miles.

“We are very pleased with this sale,” said acting MMS Director Tom Kitsos. “Strong bidding by the independent oil and gas companies was a major part of the sale, and we are particularly pleased with the high interest shown in the shallow water area where deep gas deposits may be present.” He said that there were 11 companies that were first-time bidders in the lease sale.

Many of the shallow water blocks receiving bids are in areas where companies already have equipment and pipelines are already in place. MMS regional director Chris Oynes said gas could be produced from the blocks as soon as two years from now. Another bonus for the potential producers, said Oynes, is their eligibility for federal royalty relief if they drill to at least 15,000 feet for the deep gas deposits. Many of the tracts in this week’s bidding had been leased before but had never been developed, he said.

Even though natural gas prospects were tops for the independents, the most expensive bids were in the area southeast of the Crazy Horse discovery in the Mississippi Canyon, believed to be the largest oil discovery in the U.S. Gulf. BP and Exxon Mobil Corp. are partners in several exploration efforts there, and initial reports indicate there is at least 1 B bbl in Mississippi Canyon Block 822.

Block 956, located southeast of the Crazy Horse discovery, received six bids — the most in the sale — with Exxon Mobil capturing it over five other companies. Exxon Mobil Corp. had four bids making the top 10 list, with the single highest by its Exxon Asset Management Co, which bid $26.115 million for Mississippi Canyon Block 912, with a water depth of more than 1,600 feet.

Kerr-McGee Oil & Gas Corp. was second highest, bidding $18.378 million for Green Canyon Block 680, which is more than 1,600 feet deep. Exxon Asset was also third highest with a bid of $18.315 million for Mississippi Canyon Block 956, with a water depth of more than 1,600 feet.

Other companies making the top 10 list were Anadarko Petroleum Corp., $17.134 million, Green Canyon Block 143; Exxon Asset, $16.315 million, Mississippi Canyon Block 368; PB Exploration & Production Inc., $13.352 million, Mississippi Canyon Block 725; Murphy Exploration & Production, $11.230 million Green Canyon Block 735; Murphy Exploration and partners Dominion Exploration & Production Co. and Spinnaker Exploration Co. LLC, $10.173 million, Green Canyon Block 426; Kerr-McGee, $9.215 million, Green Canyon Block 379; and Exxon Asset, $8.015 million, Green Canyon Block 860.

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