Despite high hopes for a sizeable turnout in light of currently elevated natural gas prices and royalty relief, the U.S. Department of the Interior’s Minerals Management Service (MMS) reported Wednesday that there was only modest interest at its Eastern Gulf of Mexico (GOM) Lease Sale 189.

With prices as high as they are, the MMS had hoped the lease sale in New Orleans might generate fresh prospects for new domestic production. However, the oil and gas lease sale only attracted $8.38 million in high bids, a modest turnout from the agency’s perspective.

“The bidding activity today was moderate,” said MMS Director Johnnie Burton. “However, the area offered is of relatively small size, and the highly successful Sale 181 was held only two years ago. Time for assessment of the area is needed. We believe industry remains interested in frontier areas and MMS is committed to managing these areas to help ensure America’s energy future.”

Six companies participated in the sale, which offered 256 blocks comprising 1.47 million acres offshore Alabama adjacent to the Central Gulf of Mexico planning area. Available unleased blocks in the planning area currently number 138 and cover about 0.79 million acres and are located from 100 to about 196 miles offshore in water depths of about 1,600 to more than 3,425 meters. The MMS received 16 bids on 14 tracts. The total of all bids was $9.1 million.

The highest bid received on a block was $2.23 million submitted by Shell Offshore Inc. and Nexen Petroleum Offshore USA for Desoto Canyon block 398. The deepest block bid on was Desoto Canyon Block 972, in about 8,900 feet of water.

Under the lease sale rules, the high bid on a block will go through an evaluation process to ensure the public receives market value before a lease is awarded.

The sale is the 12th Eastern GOM Outer Continental Shelf lease offering, and the configuration of 189 is the same as MMS Eastern GOM Sale 181, which was held in December 2001. Estimates of undiscovered economically recoverable hydrocarbons in this proposal range from 65 to 85 million bbl of oil and 0.265 to 0.34 Tcf of natural gas.

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