Gulf of Mexico Oil Lease Sale Draws In $382 Million in High Bids

The latest Gulf of Mexico lease sale raised $382 million in high bids, which made it the largest lease sale for the last eight years, according to Reuters.

The highest bidder in the tender was Anadarko, which offered $25 million for the exploration rights to a single deepwater block in the Gulf. The company’s total bids exceeded $100 million. Other participants included BP, Shell, Hess, Chevron, and European majors Equinor and Repsol.

In total, there were 26 companies bidding for the blocks on offer, with 325 bids submitted for deposits covering 1.7 million acres. In addition to the big players, smaller producers also took part in the tender, teaming up to bid collectively.

It is possible that interest in the lease sale was higher than it would have been under other circumstances because this will be the last lease sale until 2025, per federal government plans.

"The U.S. offshore oil and gas industry is stepping up and making the investments vital to enhance our energy, economic, and national security for decades to come," said the president of the National Ocean Industries Association, Erik Milito.

The Biden administration has not been too eager to hold the lease sale. It even tried to cancel it but a court ordered it to conduct the tender, which was a stipulation of the Inflation Reduction Act.

The obligation to sell drilling rights to the oil and gas industry was spearheaded by Senator Joe Manchin in exchange for his support for the IRA and its climate stipulations.

The federal government, however, actively looked for ways to avoid the auction, at least in its initial size. Earlier this year, the Interior Department decided to reduce the size of the area to be auctioned to 67 million acres instead of 73.4 million acres, citing the habitat of a rare whale species that fell within the initial area. The oil industry sued and won.

By Charles Kennedy for Oilprice.com

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