In the latest auction for offshore drilling rights in the Gulf
of Mexico's (GoM) prolific central region, the federal government
attracted hundreds of millions of dollars in bids. According to
the U.S. Interior Department's Bureau of Ocean Energy Management
- which oversees offshore drilling - the lease sale collected
around $872 million from oil and gas companies.
Energy majors like
) came out as some of the biggest spenders in the latest round of
auction that put 1.7 million acres of prospective oil/gas
development spread over 329 federally owned tracts in the central
Gulf - generally regarded as the most promising area for drilling
- up for sale. In all, the bureau received 380 bids submitted by
In particular, British oil and gas giant
), which was able to participate for the first time in 2 years,
submitted 24 winning bids for drilling leases in the central
Gulf. This comes barely a week after the London-based behemoth
reached an agreement with the U.S. Environmental Protection
Agency (EPA) that lifted a ban (enforced in late 2012) and
allowed BP to rejoin bidding on government contracts in the GoM
region. The bar was imposed after the agency concluded that BP
had not completely rectified the issues that led to the Macondo
well blowout in 2010.
Coming back to the bidding process, the offers will now be
reviewed by the Bureau of Ocean Energy Management with the agency
carrying out its own independent verification prior to actually
awarding any leases. The successful names will be announced
within 90 days following which the department will analyze the
proposals before issuing drilling permits.
The strong response to the recent auction has been heralded as a
sign of the central GoM's attractiveness to Western oil companies
and the region's renaissance since the oil spill, which slowed
down new offshore leases for deepwater drilling.
As a reminder, on April 20, 2010, offshore driller
) ultra-deepwater Horizon drilling platform, contracted to BP,
sank following an explosion while operating in the U.S. GoM off
the coast of Louisiana.
The incident killed 11 workers and spewed more than 200 million
gallons of crude in what is touted as the country's worst oil
spill ever. Subsequently, a moratorium was imposed on offshore
drilling at water depths of more than 500 feet in the region,
which was lifted on October 12, 2010.
This badly dented activity in the Gulf, which makes up 23% of the
domestic oil production and 7% of natural gas production.
However, current exploration successes and enthusiasm about
future prospects has driven demand for acreage in the region, as
reflected by the tremendous response to the latest round of
Moreover, energy outfits are now more confident about complying
with the strict safety and environmental requirements for
offshore operations that have been imposed in the aftermath of
the BP oil spill.
BP PLC (BP): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis
FREEPT MC COP-B (FCX): Free Stock Analysis
TRANSOCEAN LTD (RIG): Free Stock Analysis
TOTAL FINA SA (TOT): Free Stock Analysis
To read this article on Zacks.com click here.