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Few companies, cautious bidding on offshore oil leases

 
Published Aug. 24, 2016

NEW ORLEANS — The federal government's annual sale of oil and gas leases in the Gulf of Mexico attracted hardly any interest Wednesday, reflecting a dismal outlook for offshore drilling.

Only three oil companies bid on just 24 of the nearly 4,400 tracts offered for drilling and exploration in the Gulf of Mexico off the Texas coast. None competed against one another.

Among them, BP Exploration and Production, BHP Billiton Petroleum and Exxon Mobil offered a total of $18 million, the Bureau of Ocean Energy Management said.

It represents the least revenue offered by the smallest number of companies making the fewest bids yet on leases in the central or western Gulf of Mexico, said Michael Celata, the agency's regional director. Last year, five companies made 33 bids totaling $22.7 million.

Celata blames low oil prices, which have been under about $50 per 42-gallon barrel since mid 2015. Prices had ranged from $75 to nearly $120 during the six years before that.

In the end, Exxon bid a total of $1.7 million, BP $6.3 million and BHP Billiton $10 million. Nearly all the tracts they bid on are adjacent to areas already being leased, which also suggests caution.

That's a far cry from November 2012, when oil was selling at $91.20 and 13 companies offered $133.8 million in high bids on 116 tracts in the same area.