Keathley Canyon and Walker Ridge bids at Sale 259: blue=1 bid, red=2 bids, green=3 bids
Based solely on a comparison of the bids (Sale 261 vs. Sale 259), the Sale 259 rejections were, on balance, to the benefit of the public (table below). On the plus side:
Assuming all of the high Sale 261 bids are accepted, the net gain to the US Treasury is $8,749,365
Of the 14 tracts with rejected high bids at Sale 259, 8 received bids at Sale 261
Seven of those 8 bids were higher than the Sale 259 high bids, and 5 of those 7 were more than $1 million higher.
The Sale 259 bid rejections in the Keathley Canyon and Walker Ridge areas proved to be 100% beneficial. All 6 of those tracts received much higher bids at Sale 261.
The best BOEM decisions were the rejections of the Sale 259 bids for AT 5 and WR 795 and 796. The Sale 261 high bids on these 3 tracts were $10.8 million higher than the Sale 259 bids.
WR 795 and 796 were single bid tracts at Sale 259.
AT 5 received 3 bids at Sale 259. BOEM rejected the high bid despite the competitive bidding. That proved to be the right call given that the Sale 261 high bid was $3.5 million higher.
On the other hand:
None of the 5 Green Canyon rejections received any bids at Sale 261.
The high bid for GC 777 was rejected twice (Sales 257 and 259) at a cost of $1.8 million, the BP/Talos high bid at Sale 257. At sale 259, BP was the sole bidder for GC 777, and their bid was only $583,000, less than 1/3 of their Sale 257 bid. GC 777 received no bids at Sale 261.
The worst BOEM Sale 259 decisions were the rejections of the DC 622, GC 547, and GC 591 bids at a cost of $4.6 million ($5.2 if the Sale 261 bid for DC 622 is rejected).
This is not to say that the tracts with rejected bids will not ultimately be leased. However, the uncertainty regarding future sales changes the historic GoM leasing dynamic. The next opportunity for purchasing unleased tracts is a troubling unknown. Absent leasing and exploration, their resource and revenue potential will never be known.
area and block
Sale 259 high bid – company
Sale 261 high bid
govt gain (loss)
DC 622
2,101,836 – Shell
615,628* – Shell
(1,486,208)
GC 173
307,107 – Woodside
no bid
(307,107)
GC 547
1,783,498 – Chevron
no bid
(1,783,498)
GC 591
1,291,993 – Chevron
no bid
(1,291,993)
GC 642
605,505 – Anadarko
no bid
(605,505)
GC 777
583,103 – bp
no bid
(583,103)
AT 5
1,551,130 – Anadarko
5,215,628* – Shell
3,664,498
AT 133
607,107 – Woodside
no bid
(607,107)
KC 745
707,777 – Beacon
2,422,222 – Beacon
1,714,445
KC 789
707,777 – Beacon
2,143,299 – Beacon
1,435,522
WR 794
724,744 – Beacon
1,487,624 – Beacon
762,880
WR 795
774,242 – Beacon
5,301,107 – Woodside
4,526,865
WR 796
774,242 – Beacon
3,310,107 – Woodside
2,535,865
WR 750
724,744 – Beacon
1,498,555 – Beacon
773,811
*The BOEM sale 261 bid summary misidentifies the DC 622 and AT 5 bids as being for MC 622 and GC 5 respectively. The corrected identification above is based on the “Blocks Receiving Bids” file correlated with the block number and company code.
EIA reports October production of 1.959 million bopd. September production was revised down from 2.000 to 1.999 million bopd, a very slight but symbolically significant change. Foul play? 😉
“It’s great that the federal government finally has a loose game plan for getting oil companies to clean up their rusty messes,” said Miyoko Sakashita, oceans program director at the Center for Biological Diversity.
Complete removal may be the most politically expedient alternative in California, but it is by far the most environmentally damaging and poses the greatest safety risks. Old disputes about offshore oil and gas production should not be driving decommissioning policy.
Biggest prize at the holiday party went to Anadarko: Mississippi Canyon 389 – 5 bids, $25.5 million high bid
Biggest holiday shopping spree: Shell’s 65 high bids accounted for 24% of the sale’s high bids (excluding CCS bids).
Big spender award: Hess – $88.3 million on only 20 high bids. Does Chevron approve? 😀
Aussie, Aussie, Aussie, Oi, Oi, Oi: Strong performance by Woodside. 18 high bids, $24.8 million
Heia Norge!: Equinor continues to shine in the GoM! 13 high bids, $20.6 million
Spirit of America award to Red Willow Offshore which is owned by the Southern Ute tribe. 22 high bids!
Deepwater independents for (energy) independence: Beacon, Murphy, LLOG, Kosmos, Talos, Houston Energy, Ridgewood, QuarterNorth, Alta Mar, CSL, CL&F, and Westlawn
Even pace wins the race: Another solid lease sale for bp – 24 high bids.
So happy together 😀: Chevron and Hess combined for 48 high bids, $114 million
Coal in their stockings? Repsol (Sale 261) and Exxon (Sales 257 and 259) made up their own rules for acquiring carbon dumping leases. Perhaps some solid carbon in their Christmas stockings would be appropriate.
Christmas in July?: A lease sale in 2024 is needed. Sometime near the 4th of July holiday would be good. It’s up to you Congress!
Holiday greetings to our friends around the world!
It’s always interesting to compare the high bids with the “runner-up” bids on the same tracts. Usually the gap is large and, as indicated in the table below, that is the case with the Sale 261 “top 10.” This tells us that bidding is independent, that tract evaluation is far from an exact science, that information and expert opinions differ, and that companies have different business and bidding strategies.
Particularly interesting in this sale were the tracts that both Hess and Chevron, its future parent, sought to acquire. Chevron and Hess bid against each other on two of the “top 10” tracts, and Hess outbid Chevron by wide margins. Will this affect post-merger relationships? 😉
In a future post, we’ll look at the 14 rejected Sale 259 high bids and the bidding on these tracts in Sale 261.
26 companies participated (updated from pre-sale stats)
Strong participation by the GoM stalwarts: Shell, Chevron, Oxy/Anadarko, BP, Woodside (BHP), Equinor, Talos, LLOG, Walter, Kosmos, Beacon
Kudos to Arena, Byron, Cantium, Focus for keeping the shelf alive
Contrary to the regulations, it looks like we once again have a company seeking to acquire oil and gas leases for carbon disposal purposes. This time it’s Repsol which was the sole bidder for 36 low-value nearshore tracts in the Mustang Island and Matagorda Island areas (red blocks at the western end of the map above). At least Repsol also bid legitimately on 5 deepwater tracts.
Exxon was a complete no show, as was ConocoPhillips.
I couldn’t believe the release of the final Five Year Program as just a necessity to hold offshore wind sales. Back in 1969, Carolita Kallaur, Joan Davenport and I worked on a 5-year schedule based on the supply and demand needs of the nation. That approach, which developed into the elaborate process in the OCS Lands Act and the passage of the National Environmental Policy Act, is a thing of the past. Over.those 50 plus years, politics from both sides of the aisle always drove the changes
Bud's Offshore Energy (BOE) 