By December 15, 2011 0 Comments Read More →

Lease sale heightens drilling hopes

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By Claire Taylor

Wednesday’s lease sale in the Gulf of Mexico, the first since the 2010 Deepwater Horizon disaster, shows the area remains attractive to oil and gas exploration companies interested in deepwater energy resources, two Louisiana industry group leaders said.

The U.S. Department of Interior’s Bureau of Ocean Energy Management on Wednesday opened 241 bids on 191 tracts totaling more than a million acres in the western Gulf of Mexico off the coast of Texas. Twenty companies submitted bids totaling more than $712 billion.

The $338 million in winning bids included the largest bid by ConocoPhillips at $103.2 million. The company submitted the apparent high bid on 75 blocks, the most of any company involved in Wednesday’s bidding.

“It’s a positive thing that there’s still a great deal of interest in exploring the deepwater Gulf of Mexico after the Macondo,” Don Briggs, president of the Louisiana Oil and Gas Association, said.

BP submitted $27 million in high bids Wednesday. BP was operating the Deepwater Horizon platform in the Macondo Prospect of the Gulf of Mexico in April 2010 when it exploded, killing 11 workers and spilling massive amounts of oil into the ocean.

The spill sparked a reorganization of the federal agency that overseas offshore oil and gas exploration, shut down drilling and exploration for months and resulted in tighter safety regulations on the industry.

The news wasn’t all good from Wednesday’s lease sale because fewer companies submitted bids than in the past, Briggs said. Twenty companies submitted bids Wednesday compared with 27 who participated in the 2009 sale and 47 who bid in 2008, he said.

Briggs attributed the “significant decline” in independent producers submitting bids on new, post-Deepwater Horizon regulations and interest in onshore drilling.

Chris John, president of the Louisiana Mid-Continent Oil and Gas Association, said the sale results are impressive because of the competition for capital due to the recent emergency of shale plays across the U.S.

“We must recognize that today’s developments would not have been possible without the resilience of an industry that has invested millions in strengthening safety initiatives, and I am proud to be part of an industry with such a strong commitment to safe, responsible drilling,” John said in a news release.

While Wednesday’s sale involved leases off the Texas coast, Louisiana also will benefit, since it has the infrastructure that supports a majority of the Gulf of Mexico energy industry, Briggs said.

The oil and gas industry has a $77.3 billion impact on Louisiana and supports more than 300,000 jobs, John added.

U.S. Sen. Mary Landrieu hailed the lease sale as “a long-awaited, much-anticipated step toward getting back to business.” But she also criticized the slow pace at which the federal government is approving new drilling permits since the Deepwater Horizon incident.

Other companies submitting high bids in Wednesday’s sale included Apache Corporation, Union Oil Company of California, Exxon Mobil, Shell Offshore, Plains Exploration and Tana Exploration.

Each bid now will undergo a strict evaluation process within BOEM before the lease is awarded.

Original Article

Posted in: Gulf of Mexico

About the Author:

The Louisiana Oil & Gas Association (known before 2006 as LIOGA) was organized in 1992 to represent the Independent and service sectors of the oil and gas industry in Louisiana; this representation includes exploration, production and oilfield services. Our primary goal is to provide our industry with a working environment that will enhance the industry. LOGA services its membership by creating incentives for Louisiana’s oil & gas industry, warding off tax increases, changing existing burdensome regulations, and educating the public and government of the importance of the oil and gas industry in the state of Louisiana.

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