Bids opened for Gulf oil, gas leases

Oil and gas companies submitted $102.3 million in high bids announced Wednesday for energy exploration off the Texas and Louisiana shores in what was the second smallest western Gulf of Mexico lease sale since the area was opened up in 1983.

ConocoPhillips Co. had the highest single bid of $30.5 million for a lot in what is known as Alaminos Canyon in the Gulf.

The total of 61 bids on 53 tracts is the lowest since 1986 for the western region of the Gulf, said John Rodi, the Gulf regional director for the federal Bureau of Ocean Energy Management, while speaking at the Mercedes-Benz Superdome in New Orleans.

BP was not among the bidders. The British oil giant remains under suspension by the Environmental Protection Agency because of the 2010 Deepwater Horizon oil disaster.

BP is suing the EPA over the matter.

Despite the low number of bids, Rodi called the lease sale “good under the circumstances.”

Rodi contended oil companies are relying more on new seismic surveys released last year are helping the corporations focus on more targeted areas that are ripe for exploration.

Rodi added there have not been any major discoveries recently in the western Gulf and many companies are focusing on developing the leases they already purchased in recent years in other parts of the Gulf.

He said industries have invested in new leases over the past 14 months.

“I think all of that together is what formed the results of this sale,” Rodi said.

Sen. Mary Landrieu, D-La., used Wednesday’s lease sale as an opportunity to promote her proposed FAIR Act legislation to expedite and increase federal revenue sharing with the Gulf Coast states for offshore oil-and-gas production in the Gulf.

“While I applaud the continued expansion of Gulf oil and gas production, today’s lease sale is a $38 million missed opportunity for the Gulf Coast and Louisiana’s coastal restoration efforts,” Landrieu said in a prepared statement of the potential revenue sharing for the Gulf Coast states.

“This restoration work is critical for the continued production of the oil and gas that fuels our economy; to protection our coastal communities from storms and preserve a unique and cherished way of life. Instead, today, we received nothing. I will not rest until this injustice is fixed.”

Sen. David Vitter, R-La., argued federal revenue for offshore leasing would increase dramatically if President Barack Obama would move to open up the Atlantic and Pacific coasts up to offshore oil-and-gas exploration.

Although it had not fully begun, former President George W. Bush was moving in that direction.

“There is no disputing the fact that our nation’s domestic energy production on federal lands is far lower than what was projected before this administration took office, and is trending in the exact opposite direction of the rapid growth we’re seeing on private and state land,” Vitter said in a prepared statement.

“Oil-and-gas production on federal property is a process that requires leasing, permitting, exploring, more permitting, and then hopefully production. At the leasing and production stages, large sums of monies come into the federal Treasury, which is all the more reason for the administration to increase and expand their lease sales.”

As for BP, Rodi said the company was able to participate in bidding in this most recent sale.

However, if the EPA suspension remained in place after the sales were reviewed and finalized, then the bids would have been disqualified.

The Bureau of Ocean Energy Management also is launching an “environmental impact statement” study as a research supplement for examining future offshore drilling lease sales off the coasts of Louisiana, Texas, Mississippi and Alabama.

Bureau Director Tommy Beaudreau announced the plans last week “in order to consider possible new circumstances and information arising from, among other things, the Deepwater Horizon explosion, oil spill and response.”

The analysis “will focus on updating the baseline conditions and potential environmental effects of oil and natural gas leasing, exploration, development, and production in the (Gulf of Mexico),” Beaudreau wrote.

One of the public meetings on the topic is scheduled for Sept. 12 in New Orleans.