Houston (Platts)--26Nov2012/648 pm EST/2348 GMT

Judging by the scant number of newly available blocks in the upcoming Western Gulf of Mexico Lease Sale 229, the lowest in years, the auction this week probably will not be a barn-burner, analysts say, although one veteran sale observer said he expected it to be "interesting."

Only 141 such blocks are listed on offer in the sale, scheduled for Wednesday at the Mercedes-Benz Superdome in New Orleans, versus a sizable 626 newly available blocks in Western Sale 218 in December 2011 and 336 blocks in Western Sale 210 in August 2009.

The 2010 Western Sale, originally slated for August of that year, was canceled due to the Macondo oil spill and its aftermath, when the US government imposed stricter safety regulations on the Gulf and conducted new environmental impact assessments for future lease sales.

Sale 229 is unlikely to match the nearly $338 million in total high bids of its predecessor -- the first post-Macondo lease sale. That, observers say, is because of the smaller number of blocks and because last year's Western sale was what US Bureau of Ocean Energy Management Gulf of Mexico Regional Director John Rodi called an "anomalous situation."

"Last year's Sale 218 was the first sale after Macondo, and there was a lot of pent-up demand since that was the first sale in about two years in the Western Gulf," Rodi said in an interview with Platts. That sale captured 241 total bids across 191 blocks.

Rodi added that Western Sale 210 in August 2009, which grabbed $115.5 million in total high bids, might be considered a "better" benchmark against which to gauge the upcoming sale.

But he also noted that 42 newly available blocks, or about 30% of the 141 such tracts offered in Sale 229, are in deep waters of 800 meters or greater. That is a "healthy" number and tops the proportion of the 2009 Western sale, where 67 or 20% of the 336 newly available blocks were in water depths of 800 meters and deeper, said Rodi.

"Over time, the sales have been moving to bidding, [that is] more deepwater-focused," he said, adding Sale 229 will probably continue that trend.

Of the 42 newly available deepwater blocks in Sale 229, some 33 are nestled in the remote Alaminos Canyon, with just nine tracts sited in the East Breaks area to the north.

Newly available blocks are those with terms that expired and were returned by operators in the past year to BOEM, or were handed back early for other reasons. Because the tracts have been unavailable for years, they are frequently desirable as operators vie for a fresh look at the geology.

Analysts also doubted this week's sale would be a standout.

"I don't think we'll match [the $338 million] from a year ago," Dean Eldarragi, senior marine geophysicist for geophysical services provider Gulf Ocean Services, said. "In fact, I'd be very pleased if we get to 60-70% of that amount."

"We're hoping for a good sale, although I don't think it will be record-breaking," Randall Luthi, president of the National Ocean Industries Association, said. But "it will be an interesting sale [and] a good indicator of how much confidence industry has" in the Gulf.

Luthi, director of the Minerals Management Service from mid-2007 until early 2009, said Sale 229 will be the first sale under the federal government's new 2012-2017 five-year leasing plan.

Luthi and others said a handful of desirable deepwater blocks could be focal points, as happened in Sale 218. In that auction, ConocoPhillips stole the show with a bid of $103.2 million for a deepwater tract in the remote Keathley Canyon. The second-highest bid was $8.6 million for a tract in medium depth waters in the Garden Banks area.

Meanwhile, several unleased tracts west of BP's Tiber discovery at Keathley Canyon block 102, which the major has said might hold up to 3 billion barrels of oil, could drum up interest, observers said.

The 2009 discovery well, in 4,132 feet of water, was also one of the deepest wells ever drilled -- at a total depth of 35,055 feet. ConocoPhillips' $103.2 million bid was for Keathley Canyon block 95, sited near Tiber, where the company is also a partner.

The tracts surrounding Tiber "are pretty much similar type of prospects," Eldarragi said. "I think you're going to see a couple of those in that area that will receive some attention."

Eldarragi added that available blocks near the Perdido hub, the first production system to take oil from the Lower Tertiary trend in southern Alaminos Canyon, also might be targets for larger bidders.

Western Sale 229 will offer more than 3,873 blocks spread across 20 million acres off the coast of Texas, located nine to 250 miles offshore and in water depths ranging from 16 feet to more than 10,975 feet deep.

--Starr Spencer, starr_spencer@platts.com --Edited by Keiron Greenhalgh, keiron_greenhalgh@platts.com