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Posts Tagged ‘Buckskin field’

Following up on the Keathley Canyon Block 828 bid rejection

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , on September 16, 2026| Leave a Comment »

The Buckskin field (LLOG) is located in Keathley Canyon blocks 785, 828, 829, 830, 871, and 872 in 6,800 ft (2,073 m) of water. The KC 828 lease expired last year and LLOG’s bid for that block at the BBG2 sale was rejected. That bid rejection has been appealed.

As suspected, the rejection of LLOG’s Sale BBG2 bid for Keathley Canyon Block 828 has been appealed. This is an interesting case because KC 828 is part of LLOG’s Buckskin field. The block had been previously leased, but that lease expired on 9/3/2025.

We assume the lease expired due to inactivity given that the last well reached total depth more than a year prior to the expiration date. LLOG wanted to reacquire the lease back, but BOEM’s valuation was 20 times higher than LLOG’s bid. It’s also interesting that no other company submitted a bid. Did no one want a lease in an established field? BOEM valued this block far higher than any other block in the sale.

LLOG’s letter of appeal is not publicly available. Below is the summary blurb from the Serial Register Page:

By letter dated May 27, 2026, LLOG Exploration Offshore, L.L.C. appealed the  Bureau of Ocean Energy Management’s (BOEM) decision for OCS-G 38173, covering all of Block 828, Keathley Canyon. LLOG Exploration Offshore, L.L.C.  is requesting reconsideration of the rejection decision. The Adjudication Section received the written request and statement of reasons within the 15 days of the rejection decision, on May 28, 2026.

According to the applicable regulation, the BOEM/MMA Director is the deciding officer and the decision is not subject to appeal to the Interior Board of Land Appeals. The rejection seems rather straightforward under BOEM’s bid evaluation policies, but perhaps there is much more to the story.

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As Lease Sale BBG3 approaches (Aug. 12, 2026), Gulf production is high, drilling is low

Posted in drilling, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , , on July 9, 2026| 2 Comments »

Lease sale Big Beautiful Gulf 3 (BBG3) will be held on 8/12/2026. The Final Notice of Sale is attached.

Given the rather tepid BBG1 and BBG2 results and the high sale frequency, robust bidding is not expected. Nonetheless, the BBG bidding patterns and tract evaluations have been interesting, most notably BOEM’s rejection of LLOG’s bid for Keathley Canyon 828, an expired lease block in the their Buckskin field.

Keathley Canyon 828 is not among the blocks listed for sale at BBG3. Per the Notice of Sale (p. 4), “any lease blocks whose high bids were rejected and not appealed in the immediately preceding Big Beautiful Gulf lease sale, are expected to be included as eligible for lease.” Can we therefore assume that either the KC 828 bid rejection or the prior lease expiration is being appealed?

The legislatively mandated BBG lease terms are attractive – 10 years and 12.5% royalty for deepwater blocks. A more recent legislative directive requires (wrongly in my opinion) the approval of downhole commingling requests. This accelerates the return on investments in deepwater, high pressure reservoirs. Such commingling has presumably contributed to record Gulf oil production in 2025. The longer term concern is the impact on ultimate oil and gas recovery.

Meanwhile, the Gulf rig count and well start numbers continue to disappoint. Baker Hughes (7/2/2026) lists only 4 active rigs in the deepwater Gulf – one each in the Alaminos and Mississippi Canyon areas and two in the Green Canyon Area. BSEE’s borehole file lists only 15 new deepwater exploratory well starts YTD.

GOA Lease Sale BBG3 FNOS – Final Notice of SaleDownload

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Lease Sale BBG2 decision matrix; BOEM’s KC Block 828 bid rejection is interesting

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , on June 24, 2026| Leave a Comment »

The Buckskin field (LLOG) is located in Keathley Canyon blocks 785, 828, 829, 830, 871, and 872 in 6,800 ft (2,073 m) of water. The KC 828 lease expired last year and LLOG’s bid for that block at the BBG2 sale was rejected.

BOEM’s Decision Information Matrix for Sale BBG2 is attached. As previously noted, 2 of the 25 high bids were rejected: Keathley Canyon Block 828 ($1,101,202) and Atwater Valley Block 63 ($650,018).

The rejected bids were significantly below both BOEM’s Mean of the Range-of-Value and Lower Bound Confidence Interval for these single bid tracts (table below).

Block No.Companyno. of bidsbidMROVLBCI
AT 63LLOG1$650,018$2,400,000$1,800,000
KC 828LLOG1$1,101,202$24,000,000$23,000,000
MROV=Mean of the Range-of-Value; LBCI=Lower Bound Confidence Interval

In the case of Keathley Canyon 828, BOEM’s valuation is more than 20 times the high bid. BOEM valued this block far higher than any other block in the sale.

KC 828 had been previously leased and that lease expired on 9/3/2025. The lease block was part of LLOG’s Buckskin field. Apparently, the lease expired due to inactivity given that the last well reached total depth more than a year prior to the expiration date. LLOG wanted the lease back. BOEM’s rejection sends a message that the price went up (by a lot 😉).

Finally, why didn’t any other company bid on KC 828, a block that has been publicly reported as being part of the Buckskin field?

BBG2-Phase-2-Decision-MatrixDownload

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