Deepwater dominated a relatively quiet lease sale for the Western Gulf of Mexico, with the sweet spot for bidders largely residing in acreage lying in water depths of between 800 m and 1,600 m (2,625-5,250 ft).

The Bureau of Ocean Energy Management’s (BOEM) Western GoM Lease Sale 233 drew 61 bids totalling US $144 million, with the number of high bids totalling $102 million.

With the auction offering more than 21 million acres for exploration, it was ConocoPhillips that dug deepest into its pockets to offer the highest single bid of $30 million for Alaminos Canyon Block 745, which drew three other rival bids. The block lies close the few producing ultra-deepwater fields in that area, namely the high-profile Trident and Silvertip, Great White and Tobago fields, which produce to the Perdido spar hub platform operated by Shell. ConocoPhillips also submitted the highest total amount in bonus bids of just over $50 million on 29 tracts.

US major Chevron offered the second and third highest bids in the sale of $19 mil- lion and $13 million respectively, for East Breaks 499 and East Breaks 500.

With only 12 companies bidding on 53 blocks that contain the Lower Tertiary play in both shallow and deep water, the sale was described by some as a bit of a dull affair. “The number of tracts receiving bids is fairly low compared to many previous western sales when our leasing began in 1983. However, the good news is that the dollar value of the high-bid submitted puts this sale far from the bottom, maybe the seventh-lowest in terms of high bids,” said John Rodi, BOEM Gulf of Mexico Regional Director in a conference call. “This is a continuation of what we’ve seen in the past where companies are bidding on smaller tracts but focusing on those tracks and spending more money on those acquisitions,” he said.

There were a total of 37 bids for blocks in the 800-1,600 m water depth range, with 11 bids on blocks lying in a depth of more than 1,600 m. The deepest block (in terms of water depth) that received a bid was Alaminos Canyon 861 in 2,930 m (9,613 ft) of water.

National Ocean Industries Association President, Randall Luthi, commented on the lease sale: “The cost impacts to industry of continued changes to the regulatory system, such as the newly proposed production systems safety rule and the upcoming BOP rule, could have figured into how companies bid in the Western Planning Area sale, as did the current low price companies can fetch for natural gas. While this sale was not eye-popping, and may be closer to a ‘yawner’, it shows that interest in deepwater tracts remains strong.”

Lease Sale 233 is the last one in the GoM this year but the BOEM is planning to hold Lease Sale 225 in 2014.

The first two auctions in this current five year program saw a Central GoM sale this March net almost $1.2 billion in high bids, while a Western GoM offering last November brought in nearly $134 million in high bids. Acting Assistant Secretary for Land and Minerals Management, and BOEM Director, Tommy P. Beaudreau, said: “Over the past 14 months, the off- shore oil and gas industry has invested well over $3 billion in new federal leases in the Gulf of Mexico.” BOEM estimates this latest lease sale could result in the production of 116 to 200 MMbbl of oil and 538 to 938 Bcf of natural gas.