August 21, 2019 / 4:31 PM / 3 months ago

U.S. offshore oil auction draws $159.4 million in bids for Gulf acreage

NEW YORK (Reuters) - A major auction of oil and gas leases in the U.S. Gulf of Mexico on Wednesday received $159.4 million in high bids, government officials said.

Combined with a March auction that drew $244.3 million in high bids, the total was the highest annual bid level since 2015, officials from the Bureau of Ocean Energy Management said in a conference call with reporters following the sale.

The auction offered 77.9 million acres (31.5 million hectares), of which 835,006 acres received bids, according to preliminary data from the BOEM. Of the 151 tracts that received bids, 117 were in water more than 800 meters (2,625 ft) deep.

Equinor ASA and BP Plc bid on the most tracts, with 23 and 21 bids respectively. BHP Group submitted 20 bids, including the largest single amount for acreage on a parcel in the Green Canyon formation.

Most bids centered around existing infrastructure where oil companies could place relatively inexpensive tie-backs to drilling platforms that are already in place. Companies also placed bids on more prospective acreage in the East Breaks and Lloyd Ridge formations, said Mike Celata, Director, BOEM New Orleans Office.

“I think companies are looking to the future in some of the bidding that they did today,” Celata told reporters on a conference call.

The outcome of the lease sale was the latest signal that the oil and gas industry maintains an interest in U.S. waters. Offshore drilling is a crucial part of the Trump administration’s “energy dominance” agenda to open up more federal land and waters to energy exploration.

Still, offshore oil accounts for just under 20% of U.S. production. Most of the recent U.S. boom in oil production has been focused onshore, where it is cheaper to drill than in deepwater.

Beyond competition from drilling onshore in shale formations, U.S. offshore acreage must also compete with opportunities off the coast of Brazil, Guayana and other basins.

Reporting By Jessica Resnick-Ault and Nichola Groom; Editing by Marguerita Choy

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