Lowest Bidding Ever in "Milestone" GoM Lease Sale

Chart courtesy BOEM

By MarEx 2016-08-24 21:21:52

On Wednesday, the Bureau of Ocean Energy Management sold 140,000 acres of oil and gas exploration leases in the Western Gulf of Mexico for a total of $18 million – the lowest bid take for the region ever.

The bids covered just 0.5 percent of the 24 million acre "milestone lease sale," which put up for auction "all available unleased areas in the Western Gulf of Mexico Planning Area." ExxonMobil, BHP Billiton and BP bid for a combined 24 tracts. None of their bids overlapped and each tract received only one offer.  

Last year's sale was the previous record low: it brought in 33 bids totalling to $23 million. 

Randall Luthi, president of the National Ocean Industries Association, said in a statement that "the relatively modest results of today’s Western Gulf of Mexico lease sale are indicative of the current market conditions and regulatory environment."

The BOEM will review the bids within 90 days to determine whether they represent fair market value. 

Video of the lease sale was live streamed online, thereby "eliminating the need for the public to physically attend the bid reading at the Mercedes-Benz Superdome," the BOEM said in an advance notice. 

The video was not available on the agency's site as of Wednesday afternoon.
Past E&P lease sales in New Orleans have featured strong attendance from protesters, and the video stream may be part of a trend to move auction proceedings online altogether. BOEM has already moved offshore wind lease sales onto the internet, and the Bureau of Land Management intends to do the same for onshore oil and gas leases. 

Four protesters were arrested outside of BOEM offices on Tuesday; climate activists 350.org had called on President Barack Obama to cancel the lease sale, linking the present flooding conditions in New Orleans to climate change and carbon emissions.

Luthi described the activists' rhetoric as a "shameful" attempt to "score cheap political points" in a statement Wednesday.