American Deepwater Oil Exploration Isn’t Dead

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By Julianne Geiger

In a move that came as a surprise to some, today’s oil and gas lease round in the U.S. Gulf of Mexico generated substantial interest on Wednesday.

The sum of the high bids clocked in at $120 million, according to the Bureau of Ocean Energy Management.

Of the 14,900 blocks offered in Sale 256, 93 received bids, for a total 517,732 acres that received bids. Twenty-three companies submitted bids.

The deepest blocks generated the most interest, with 36 of the 93 bids coming in for the blocks at 1600 or more meters, and nearly all of the interest was in water deeper than 800 feet.

The block generating the most interest was block NH16-10 Mississippi Canyon. The block that attracted the highest bid was the ultradeepwater block NG15-06 Walker Ridge, which went for almost $12 million to Repsol/Equinor. It was also the block that attracted the highest bid per acre, at $2,083 per acre.

Shell, EnVen Energy, BP, Chevron, and Repsol showed the most interest in today’s sale, submitting a total of 63 bids. Shell’s total high bids came to nearly $28 million.

The interest in today’s sale shows that there is still interest in deepwater drilling, despite the costs, despite the pandemic, and despite low oil prices.

2019 was a record year for oil production in the United States, according to the BOEM, boasting 596.9 million barrels—or 15% of all domestic oil production—that contributed nearly $6 billion in direct revenues to the government.

Lease Sale 256 was livestreamed from New Orleans and was the seventh offshore sale held under the 2017-2022 National Outer Continental Shelf Oil and Gas Leasing Program.

Crude Oil

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