Oil Lease Sale

By: Associated Press
By: Associated Press

With oil near record prices and natural gas prices spiking in recent weeks, exploration companies made $285.2 million in high bids Wednesday for offshore leases near the coast of Texas and far western Louisiana.

The figure overwhelmed last year's $171.4 million in high bids issued in the federal government's annual sale of leases in the western Gulf of Mexico.

The tracts do not offer immediate relief from the current supply worries and high prices. A year ago, oil was trading at $47 per barrel. Recent prices have been hovering in the mid-$60 range. The leases, which will take years to develop even if development-quality deposits are found, range from five years for shallow leases to 10 years for ultra-deepwater development.

Fifteen of the tracts that received bids are in water depths of 200 meters or less, where exploration companies have been returning to look for "deep gas" that is contained thousands of feet down in the Gulf shelf. Years ago, shallower gas was developed from the leases before new drilling technologies made it possible to drill much deeper.

Another 197 bids were targeted for ultra-deepwater tracts that are 800 meters and deeper.

The western sale is the smaller of the two major offshore sales in the Gulf. In March, the much-larger central Gulf sale off the coasts of Louisiana, Mississippi and Alabama attracted $354 million in high bids after receiving 651 bids from 72 companies on 428 tracts.

On the Net:U.S. Minerals Management Service: http://www.mms.gov

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