Oil lease sale: 21M acres in western Gulf

[August 29, 2013]  NEW ORLEANS (AP) -- ConocoPhillips Co. had $50.3 million in high bids, including the day's highest single bid of $30.5 million, in the second-smallest federal oil lease sale for tracts off the Texas coast since area-wide sales began in 1983.

Overall, a dozen companies submitted $102.4 million in high bids on 53 blocks, the federal Bureau of Ocean Energy Management said Wednesday. The record low total for high bids in the area was $30.6 million submitted in 1992.

The total of 53 high bids was also the second lowest ever for the western Gulf area. The smallest number of bids in the area was in 1986 with 41 bids, said John Rodi, the bureau's regional director. That was the year Saudi Arabia flooded the market and world oil prices sank to less than $9 a barrel from $27.

"The good news is that the dollar value of high bids submitted puts this sale far from the bottom," he said. That total was the seventh-lowest out of 30 lease sales since 1983, he said.

The last western Gulf lease sale, in November, brought $133.8 million in winning bids on 116 tracts. ConocoPhillips made 62 of those bids, for a total of $51.7 million.

"Our belief is that there really, in the last year, has not been a large amount of new information" about that area, Rodi said. "There hasn't been a significant number of new discoveries or successful drilling results in the western Gulf of Mexico that might increase interest in a sale."

However, he said, petroleum companies have spent $3.4 billion in the western Gulf since December 2011. "I believe they're also taking the opportunity to look at what they've acquired recently and how to invest in those properties," he said.

ConocoPhillips bid on 31 blocks in the latest sale. It submitted the only bids on 27 of them and high bids on two others.

Forty-seven of the 53 tracts were uncontested; 42 high bids were for less than $750,000.

ConocoPhillips' winning bid of $30.5 million for a tract in the mile-deep water of Alaminos Canyon block 475 by itself nearly matched the overall record low total of 1992.

ExxonMobil Corp., Chevron USA Inc. and Anadarko US Offshore Corp. also bid on that tract, one of six to get more than a single bid. The other five, including the block adjacent to 475, got two each.

ConocoPhillips outbid Anadarko with a bid of $2.5 million to $934,200 for Alaminos Canyon block 474.

Seismic data released last year by WesternGeco, a Schlumberger Ltd. subsidiary, may account for the popularity of that spot, Rodi said.

Chevron had the morning's second and third-highest bids, $19.1 million and $13.1 million for adjacent tracts in the East Breaks area. It was the only bidder on those blocks and on the third that it won, for $620,810.

BP PLC did not bid. After the company's guilty plea in November to criminal charges in the Gulf of Mexico oil spill of 2010, the Obama administration ordered a stop to new federal contracts and disqualified it indefinitely from winning new leases to drill on taxpayer-owned lands.

The company could have bid, Rodi said. "At some point (the suspension) may get lifted. That's why we wanted to preserve their right to bid," he said.

[Associated Press; By JANET McCONNAUGHEY]

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