red=blocks receiving bids at BBG2; blue=BBG1 and Sale 261 leases; green=active leases issued prior to Sale 261
Although bidding at Sale BBG2 was rather subdued, Gulf heavyweights BP, Chevron, Shell, and Oxy/Anadarko, along with increasingly important Woodside Energy, competed for the 4 red blocks in the Green Canyon area (map above and table below). These elephant hunters presumably see excellent Paleogene (Wilcox) prospectivity in those blocks.
17 of the sale’s 38 bids (45%) and $32.8 milion of the sale’s $47 million in high bids (70%) were for these 4 blocks. BP’s $21 million bid for GC 404 was by far the sale’s highest bid.
Green Canyon Block No.
No. of bidders
High Bidder
Bid
404
5
BP
$21,009,990
405
2
BP
$885,99
448
5
Chevron
$4,967,067
492
5
Chevron
$5,887,188
At this time, the high costs and technical complexities (e.g. deepwaterand high pressure/high temperature reservoirs) limit Wilcox development to major oil companies and well financed, technically savvy independents. Expect some of the international majors that did not participate in BBG2 to acquire lease interest at a later date, which will again raise questions about the merits of joint bidding restrictions.
From AAPG graphic-Wilcox trend map. Eastern area can be subdivided into an outboard and inboard trend, with wells in the latter area showing variable thickness due to salt tectonics contemporaneous with deposition (From Zarra et al. 2019’s AAPG Search and Discovery article).
Imbedded below is a good presentation on the Paleogene Wilcox by Dr. Mike Sweet, Univ. of Texas:
Although no one was expecting a barnburner only 3 months after the previous sale, BBG2 was historically weak for a Gulf-wide sale. The table below compares BBG2 with the previous 4 Gulf sales, none of which were particularly impressive.
However, the sale was not without highlights. There was some spirited bidding for tracts in the Green Canyon area. BP’s bid was the highest of 5 for GC Block 404. BP bid $21 million for the block, 45% of the high bids sum for the entire sale. The BP bid was also $20 million higher than the next highest bid for that tract (ouch!).
Also interesting was Chevron edging Shell $5,887,188.00 to $5,501,240.00 to acquire GC Block 492.
Sale No.
257
259
261
BBG1
BBG2
date
11/17/2021
3/29/2023
12/20/2023
12/10/2025
3/11/2026
companies participating
33
32
26
30
13
total bids
2233
2842
3161
219
38
tracts receiving bids
2143
2442
2751
181
25
sum of all bids $millions
198.5
309.8
441.9
371.9
69.9
sum of high bids ($millions)
101.7
263.8
382.2
279.4
47.0
highest bid company block
$10,001,252 Anadarko AC 259
$15,911,947 Chevron KC 96
$25,500,085 Anadarko MC 389
$18,592,086 Chevron KC 25
$21,009,990 bp GC 404
most high bids company sum ($millions)
46 bp 29.0
75 Chevron 108.0
65 Shell 69.0
50 bp 61.0
6 Anadarko (Oxy) 4.0
sum of high bids ($millions) company
47.1 Chevron
108 Chevron
88.3 Hess
61.0 bp
22.6 bp
most high bids by independent
14-DG Expl.
13-Beacon 13-Red Willow
22-Red Willow
14-Murphy
5-LLOG
1excludes 36 leases improperly acquired for carbon disposal purposes; 2excludes 69 leases improperly acquired for carbon disposal purposes; 3excludes 94 leases improperly acquired for carbon disposal purposes
For historical comparison purposes, Gulf Sale 206 drew $3.7 billion ($5.6 billion in today’s dollars) in 2008. Twenty-siz sales between 1972 and 2013 garnered more than $1 billion in high bids.
The 2025 Gulf of America Safety Compliance Leaders are ranked below according to the number of incidents of non-compliance (INCs) per facility inspection. To be ranked, a company must:
operate at least 2 production platforms
have drilled at least 2 wells during the year
average <1 INC for every 5 facility inspections (0.20 INCs/facility inspection). This is a higher standard (fewer INCs) than in previous years.
average <1 INC for every 10 inspections (0.1 INCs/inspection). Note that each facility inspection may include multiple types of inspections (e.g. production, pipeline, pollution, Coast Guard, site security, etc). In 2025, there were on average 3.2 inspections for every facility inspection.
operator
W
CSI
FSI
total INCs
facility insp
INCs/ fac insp
insp
INCs/ insp
Shell
3
8
1
12
231
0.05
557
0.02
Chevron
10
8
0
18
260
0.07
772
0.02
Oxy
2
6
1
9
133
0.07
325
0.03
BP
8
2
0
10
122
0.08
304
0.03
Murphy
6
2
0
8
70
0.11
177
0.05
Cantium
5
7
4
16
121
0.13
488
0.03
Gulf-wide 2025
815
445
84
1344
3179
0.42
10218
0.13
Gulf-wide 2024
957
398
109
1464
3133
0.47
10664
0.14
Notes: Numbers are from published BSEE data; INC=incident of non-compliance; W=warning INC; CSI=component shut-in INC; FSI=facility shut-in INC; INCs/fac insp= INCs issued per facility inspection; each facility-inspection may include multiple types of inspections (e.g. production, pipeline, pollution, Coast Guard, site security, etc), in 2025, there were on average 3.2 inspections for every facility inspection
Criteria: This ranking is based solely on BSEE’s published compliance data. The absence of timely public information on safety incidents (e.g. injuries, fires, pollution, gas releases, property damage) precludes inclusion of these data. Although Panel Investigations are conducted for fatalities, serious injuries, and significant pollution events, the last panel report was for an incident on 3/25/2022, and no information is available for any ongoing investigations. BSEE District offices investigate the more significant incidents that don’t qualify for panel investigations. These District Investigation reports are more timely, but some are not issued within 90 days of the incident. The District reports will be reviewed later in the year. Note that there were no occupational fatalities in 2025.
Observations:
The overall inspection and INC results for 2025 were similar to those for 2024.
The top companies performed better in 2025 than in 2024. In 2024, only 2 companies had INC/facility inspection ratios of <0.10 and only 3 had ratios <0.15. In 2025, all 6 of the performance leaders had ratios <0.15.
Shell’s total INCs and INCs/facility inspection decreased by 73% and 78% respectively vs. 2024
Cantium, which operates 85 shallow water platforms, has demonstrated that a shelf operator can be an outstanding safety performer. Cantium’s total INCs and INCs/facility inspection decreased by 50% vs. 2024
Should fewer inspections be conducted at facilities that have such low INC rates? On the one hand, fewer inspections would reduce regulatory costs and transportation risks. On the other hand, there are benefits from BSEE inspection visits besides compliance enforcement. These include direct communication with offshore workers (including contractors) regarding regulatory policies and safety practices, witnessing safety tests, evaluating new technology, and assessing management system implementation and corporate culture at the facility level.
Absent specific details on the violations, no attempt was made to weight the INCs. Although shut-in INCs are generally considered to be more significant than warnings, that is not always the case. For example, a component shut-in INC for a safety device that is marginally out of tolerance and is corrected on the spot may be less serious than a warning that is indicative of structural deterioration, poor maintenance, or organizational shortcomings.
Not meeting one of the activity level requirements, but nonetheless noteworthy, were the compliance records of LLOG and BOE Exploration & Production (younger than and unrelated to the BOE blog 😀). See their impressive results below:
Will the oil and gas lease sale boldly named Big Beautiful Gulf 1 (BBG1) live up to its grand name? Given the more favorable lease terms and the 2 year gap since the last sale, BBG1 should surpass the previous 3 sales (table below). Questions:
Which majors will be the most active bidders? Chevron? Shell? BP? Oxy/Anadarko?
Will former Gulf of Mexico stalwarts Exxon and Conoco Phillips participate for the first time in years? Probably not, but US super-majors should participate in the US offshore program.
How many companies will submit bids? Would like that to be a number >35.
How many tracts will receive bids? A number >300 would be very encouraging.
Will the total high bids exceed $400 million?
Will we see an increase in shelf interest?
Which independents will be the most active?
After the not-so-clever carbon disposal acquisitions in the last 3 sales, will the number of carbon disposal bids be zero? For the first time ever, the Federal government felt compelled to stipulate the obvious (see the proposed notice for OCS Sale 262) – that an Oil and Gas Lease Sale is only for oil and gas exploration and development.
See the summary data below for the last 3 Gulf lease sales. We’ll fill in the blanks next week.
Sale No.
257
259
261
BBG1
date
11/17/2021
3/29/2023
12/20/2023
12/10/2025
companies participating
33
32
26
total bids
2233
2842
3161
tracts receiving bids
2143
2442
2751
sum of all bids $millions
198.5
309.8
441.9
sum of high bids ($millions)
101.7
263.8
382.2
highest bid company block
$10,001,252.00 Anadarko AC 259
$15,911,947 Chevron KC 96
$25,500,085 Anadarko MC 389
most high bids company sum ($millions)
46 bp 29.0
75 Chevron 108.0
65 Shell 69.0
sum of high bids ($millions) company
47.1 Chevron
108 Chevron
88.3 Hess
most high bids by independent
14-DG Expl.
13-Beacon 13-Red Willow
22-Red Willow
1excludes 36 leases improperly acquired for carbon disposal purposes; 2excludes 69 leases improperly acquired for carbon disposal purposes; 3excludes 94 leases improperly acquired for carbon disposal purposes
Every deepwater platform installed since Feb. 2018, when Chevron installed its Big Foot tension leg platform (TLP), has been a Floating Production Unit (aka FPU or production semisubmersible). During that period, no new SPARs, FPSOs, or TLPs were installed.
The list (below) of these simpler, safer, greener FPUs has grown by two with the initiation of production at Shenandoah and Salamanca. Note the water depth range from 3725 to 8600 ft.
platform
operator
water depth (ft)
first production
Appomattox
Shell
7400
May 2019
King’s Quay
Murphy
3725
April 2022
Vito
Shell
4050
Feb 2023
Argos
bp
4440
April 2023
Anchor
Chevron
4600
Aug 2024
Whale
Shell
8600
Jan 2025
Shenandoah
Beacon
5840
July 2025
Salamanca
LLOG
6405
Sept 2025
The efficiencies achieved with the simpler platform designs combined with the high pressure (>15,000 psi) technology developed over the past 2 decades is facilitatihg production from the highly prospective Paleogene (Wilcox) deepwater fans. (For those interested in learning more about the geology, see the excellent presentation by Dr. Mike Sweet, Univ. of Texas, that is embedded in this post.)
All of the operators note the cost-saving similarities in their FPU designs. For example, Vito and Whale are very much the same despite the 4550′ difference in water depth.
The latest Baker Hughes Rig Count Report shows only 10 rigs actively drilling in the Gulf. All are at deepwater locations – 7 in the Mississippi Canyon area, 2 in Green Canyon, and 1 in Alaminos Canyon. Per the BSEE borehole file, Shell accounts for most of the current MS Canyon wells and the Alaminous Canyon well. Beacon is also drilling in the MS Canyon, and the Green Canyon well appears to be a Chevron operation.
Only Anadarko/Oxy, Beacon/BOE, BP, Chevron/Hess, Shell, and Talos have spudded deepwater exploratory wells in 2025 YTD. Arena and Cantium are the only shelf drillers – all development wells.
Technological advances and extensions of past discoveries have sustained Gulf production, but declines are certain over the longer term if drilling activity doesn’t increase. Oil price uncertainty is an issue, but that’s always the case. Semiannual lease sales are now legislatively required and the terms will be attractive, so those issues are off the table. Let’s see what the bidding looks like at the upcoming sale.
The decline in deepwater discoveries (BOEM data below) is particularly discouraging. Per BOEM, the last deepwater field discovery was in March 2023.
Talos announced successful drilling results at the Daenerys prospect (Katmai West #2) in the Gulf of America (Walker Ridge blocks 106, 107, 150, and 151).
Daenerys is a good example of the evolution of deepwater project ownership, which was once exclusively the domain of major international oil companies. Over the past 20 years, participation by independents increased gradually, followed by smaller independents and informed investment companies.
Impressively, the Daenerys partnership (table below) includes a tribe that has the same % ownership as a super-major, and a highly efficient investment company owned by a single person.
Talos (operator)
large US independent
27.0% share
Shell
international supermajor
22.5%
Red Willow
private company owned by the Southern Ute Tribe
22.5%
Houston Energy
private independent focused on deepwater energy resources
Reuters and others report that zinc from a new Chevron well has contaminated oil production destined for an Exxon refinery via Shell’s Mars Pipeline System. Because contaminated crude may cause maintenance issues and reduces the quality of refined products, Exxon will not accept crude from the Mars system until the zinc issue has been resolved.
The Mars system delivers about 575,000 bopd raising concerns about supplies to Gulf Coast refineries. But fear not, DOE authorized the delivery of up to 1 million barrels of oil from the Strategic Petroleum Reserve to the Exxon’s Baton Rouge refinery.
(Ironically, yesterday’s post pointed to the importance of the SPR and questioned the decision to drastically reduce crude oil purchases. This zinc incident is likely to be minor, and Exxon will repay the SPR in kind. However, more serious regional, domestic, and international events could call for much greater SPR withdrawals.)
The above map shows Chevron platforms that connect with the Mars system at Port Fourchon.
Speculation/commentary:
The well/platform responsible for the zinc contamination has not been identified. Given that production is ramping up at Chevron’s Anchor facility, a new well on that platform may be the source of the zinc. Other Chevron platforms that connect to the Mars system are indicated in the diagram above.
Given that zinc in crude oil is rare, a well completion fluid containing zinc bromide may be the culprit.
Note the integration of offshore production streams, and the involvement of 3 industry super-majors. These companies are highly competitive, as evidenced by the Chevron-Exxon Stabroek dispute, but are also cooperative in producing, transporting, and refining oil and gas. However, they and other majors are restricted (rather illogically) from bidding jointly for leases.
Bud's Offshore Energy (BOE) 