Most rejected bids in March Central Gulf lease sale were in deepwater: BOEM documents

Houston (Platts)--23Jul2013/1253 pm EDT/1653 GMT


Most of the 13 bids that the US Bureau of Ocean Energy Management rejected from the March 2013 Central Gulf of Mexico Lease Sale 227 are located in coveted areas of the deepwater Gulf, BOEM documents show.

Nine of the 13 bids that were rejected for what the BOEM calls "bid insufficiency" are situated in either the prolific lower Mississippi Canyon area or the emerging Norphlet Trend of DeSoto Canyon, the documents show. Two other rejected bids are sited in the midwater Green Canyon area.

All rejected bids were for sums over $600,000; six of them were for more than $1 million, the review showed.

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BOEM on Monday said it awarded 307 leases from the Central lease sale, held in New Orleans on March 20, for a total value of $1.2 billion. In all, 52 companies participated in the sale. That compares to a total value of $1.68 billion reaped from the Central Gulf sale in 2012, in which 56 companies participated.

The agency said in a statement that rejected bids were "insufficient to provide the public with fair market value for the tracts."

Mississippi Canyon is home to several notable finds, including BP's legacy Thunder Horse and Shell's Mars and Mensa fields, as well as the BP-operated Macondo well that blew out in April 2010 and caused the US' biggest offshore oil spill. DeSoto Canyon hosts some emerging discoveries, including Shell's Appomattox and Vicksburg.

Four of the deepwater rejected bids from Central Sale 227 -- two in Mississippi Canyon and two in DeSoto Canyon -- were submitted by Eni, which offered a total of almost $5 million for them. Three other DeSoto Canyon rejected bids were originally made by Shell Offshore, for a total of $1.8 million.

Two other deepwater rejected bids were in Green Canyon and had been jointly offered by Colombian operator Ecopetrol and the US' Murphy Oil, for a total of $3.6 million. The remaining two rejected deepwater offers were for tracts in Mississippi Canyon: one was made by an offshore subsidiary of Anadarko Petroleum for $771,840, while the other was made by privately held LLOG Bluewater Holdings at $2.34 million.

The two shallow-water rejected offers were by other privately held companies -- $697,550 for a block in western Louisiana's East Cameron area by Talos Energy Offshore and $1.3 million for a tract in the tiny South Pelto area offshore Port Fourchon, south of New Orleans, by Renaissance Offshore.

The rejected tracts will be re-offered at the next Central Gulf lease sale, tentatively scheduled for March 2014, said BOEM.

--Starr Spencer, starr.spencer@platts.com
--Edited by Kevin Saville, kevin.saville@platts.com

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