Natural gas drilling in the shallow Central Gulf of Mexico drewthe most bids, which were mostly from U.S. independents, in thisweek’s Minerals Management Service lease sale. MMS reported that60% of the bids were for shallow water tracts in acreage less than200 meters deep, considered the best places for quick gasproduction, with total bidding of $227.654 million.

The sale drew bids by 90 companies on 547 blocks for a total of$505,468,501 (see Daily GPI, March 29). The annual Central Gulfsale, which covers acreage located off the coasts of Louisiana,Mississippi and Alabama, had a 60% higher response over last year’ssale, according to MMS.

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

Even though natural gas prospects were tops for theindependents, the most expensive bids were in the area southeast ofthe Crazy Horse discovery in the Mississippi Canyon, believed to bethe largest oil discovery in the U.S. Gulf. BP and Exxon MobilCorp. are partners in several exploration efforts there, andinitial reports indicate there is at least 1 B bbl in MississippiCanyon Block 822 (see Daily GPI, Feb. 14).

Block 956, located southeast of the Crazy Horse discovery,received six bids — the most in the sale — with Exxon Mobilcapturing it over five other companies. Exxon Mobil also made thehighest bid in the sale, for Mississippi Canyon Block 912, bidding$26.115 million.

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