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08-20-2014, 01:49 PM #1
Uncle Sam to collect $110 million from offshore oil auction
Uncle Sam to collect $110 million from offshore oil auction
Posted on August 20, 2014 at 11:54 am by Jennifer A. Dlouhy
(StockMonkeys.com)
WASHINGTON — Oil and gas companies are set to pay the government $110 million in high bids for leases in the western Gulf of Mexico, after an auction Wednesday that underscored the industry’s interest in deep-water territory.
Fourteen companies participated in the sale, which nominally put 21 million acres up for grabs, though ultimately, just 81 blocks spanning 433,823 acres were sold.
The industry’s interest was concentrated on the Alaminos Canyon area and territory near the U.S.-Mexico maritime border that had been off limits for development while the two countries enacted a treaty to govern oil development. About a quarter of the bids were for territory in that area.
Western sale: 14 companies bid on Gulf acreage
“This sale . . . reaffirms the industry’s great interest in deep-water prospects in the transboundary area,” said Randall Luthi, head of the National Ocean Industries Association.
Big participants included BHP Billiton, ConocoPhillips and BP, which was the high bidder on 27 of the 32 bids it submitted to the Interior
Department’s Bureau of Ocean Energy Management.
Companies view their success not just in terms of how many tracts they won but also how much they paid for the territory. The government’s sealed bidding process means that companies don’t know how many other firms will be jockeying for the same blocks — nor what they are offering. As a result, individual blocks can attract widely varying offers.
Consider that Chevron won Alaminos Canyon block 215 by offering $8.5 million for the tract — nearly 10 times the $873,760 bid by its only competitor for the tract, Anadarko Petroleum Corp.
Chevron also made the highest single bid in the sale — a $16.8 million offer for Alaminos Canyon block 431.
Shell Oil Co. lodged just one offer in the sale, for territory near its Perdido developments in the Gulf. Its $1.75 million bid was enough to win Alaminos Canyon block 905, edging out the only other competitor, Stone Energy, which had bid $1.06 million for the tract.
Shell said in a statement that the acquisition strengthens its existing position in the Perdido fold belt, where the company already claims production from 14 wells.
BP said in a statement that the company’s participation in Wednesday’s sale “further underscores its commitment to the Gulf.”
Although sale results are still preliminary, Wednesday’s auction is set to generate more revenue for the federal government than the last western Gulf auction, held in August 2013, which yielded $102.4 million in winning bids for 53 lease blocks.
Ultimately, companies’ total bids — including the winning and losing offers — amounted to $135.5 million.
http://fuelfix.com/blog/2014/08/20/uncle-sam-to-collect-110-million-from-offshore-oil-auction/
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