Despite declining gas prices, drilling economics and drilling activity in the Gulf of Mexico, the Interior Department’s Minerals Management Service said western Gulf lease sale 180 is the fourth largest in the last 10 years in terms of the number of tracts receiving bids. The lease sale, which will take place on Wednesday, received 386 bids on 320 tracts from 44 producers. The last western Gulf lease sale last August received 226 bids on 266 tracts, totaling $167.4 million from 60 producers, said MMS spokeswoman Caryl Fagot.

However, MMS reported that it received no bids on Western Gap tracts offered in the Central Gulf of Mexico Lease Sale 178, Part 2. The Western Gap is thought to contain huge amounts of untapped oil and gas but the area is beyond 200 miles between the United States and Mexico in ultradeep water. It’s an area that was opened under a treaty completed just last year.

Lease sale 178 offers blocks that are beyond the U.S. Exclusive Economic Zone (EEZ) in the northern portion of the Western Gap. It encompasses 53 whole or partial blocks in the Central Gulf Planning Area that were not offered in the Central Gulf Sale 178, Part 1, held in March. The blocks cover more than 294,000 acres, and offer a primary lease term of 10 years. Western Gulf lease sale 180 also includes 258 blocks in the Western Gap region. Both sales also offer several incentives, including royalty relief for deepwater oil and gas exploration and production.

“We may get some bids in the Gap area, but under sale 180 rather than 178,” said Fagot. “It’s far out there. There’s no infrastructure. It’s deep water. There could be any number of reasons we didn’t see any bids in 178. Perhaps they are waiting until [prices rebound]. Maybe they didn’t have enough seismic information. We can only guess. They may be putting their money in the tracts on the western side. We’ll have to wait and see tomorrow.

“Lease Sale 180 was not as big as the big ones we had in the late 90s but it’s not real far down there either,” she added. “With area-wide leasing, there are thousands of tracts offered — whatever is not leased in the whole area — so there is an abundant number of tracts. All factors come into play: where prices are, whether the companies have money on their hands to go out in buy leases, whether they already hold a lot of leases and don’t need any more. All those things need to be considered. But this one fits right in there not far behind the whopper sale in 1997.” The western Gulf lease sale in 1997 received 1,224 bids on 804 tracts with high bids totaling $616.2 million.

The formal opening of the bids in lease sale 180 will take place Wednesday at 9 a.m. in downtown New Orleans. It will be webcast through three sites: the Offshore Oil Scouts Association at www.oosa.com , through GoGulfTV at www.gogulf.net , and through Arthur Andersen at www.energyleasesale.com .

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