GOM oil blocks seen to attract numerous bids
The oil industry, including a U.S. government agency, is quite optimistic about this week’s lease sale of oil blocks off the Central Gulf of Mexico (GOM) to firms ready to draw from their oil investment funds.
John Rodi of the Bureau of Ocean and Energy Management disclosed that the central GOM has been touted as an oil-rich, high-value zone, thus, a good number of bidders are expected to join and offer quality bids.
Two years ago, the auctioned tracts in the same area fetched close to $950 million in total bids. According to some sale-watchers, the current optimism is due to recent encouraging finds in the area and the growing number of firms who have been looking forward to another sale. After the Macondo blow out, some operators like Chevron and ExxonMobil have discovered new oil potential at the Moccasin and Hadrian blocks, both within the vicinity of the GOM’s Keathley Canyon. It’s highly possible that more firms will want to explore the area and opt to lease nearby blocks.
Another upside for the central sale is the current crude oil prices. Though prices seem to have climbed recently, they are still within the oil sectors’ acceptable range considering that deep-water exploration process takes years.
According to some observers, oil giants are again expected to participate in the bids and blocks in the deep waters will dominate the sale.
The central sale 216/222 could be the last auction to be held under the state’s 2007 to 2012 5-year leasing program. The next program (2012 to 2017) has not yet been officially approved, according to National Ocean Industries Association President, Randall Luthi.
Luthi added that, for this reason, there is no available information yet as to when the next bidding round under the new program will be. This offers another upside to the Central Sale as firms will most likely invest in oil blocks that are already on hand.
Based on records of the past 2010 auction, Anadarko Petroleum offered a hefty $52.5 million to acquire the Walker Ridge block 793 which is quite near new blocks that are part of the Central Sale 216/222. Other major firms offered from $18 to 43 million each for tracts within the deeper waters. This goes to show that operators will not hesitate to shell out hefty sums to acquire prime blocks.
Gulf Ocean Services Senior Geophysicist Dean El Darragi said that the deep waters offered under Sale 216/222 are relatively prime blocks that would certainly fetch a lot of bids.