2007 has proven to be the most popular year for new lease activity in the deepwater Gulf of Mexico western area, illustrating its attractiveness, particularly in the Lower Tertiary play, reports energy-research and -consulting firm Wood Mackenzie. In contrast, although the Gulf shelf still holds interest for some, bidding activity reflects a mature section in decline.
WoodMac analyzed the results of Western Lease Sale 204, held by the U.S. Minerals Management Service in August.
Hugh Hopewell, Gulf of Mexico research analyst for WoodMac, says, "This is the first sale covering the revised Western planning area following the extension of the Central planning area, both westward and eastward. The result has been a smaller Western area, which accounts for the reduction in numbers of blocks available. Sale 204 offered 3,338 blocks up for lease, compared to 3,865 blocks offered in the previous Western sale (200)-a reduction of 14%."
The study takes into account the revisions to ensure an accurate analysis. "In the deep water, while the numbers of apparent leases almost doubled compared to 2006, the total apparent successful bid amount of $249 million is nearly four times the previous year.
"On the shelf, both apparent high-bid amounts and leases gained were the lowest in recent years; apparent high-bid amounts were around 25% lower than in 2006 under the new Western planning area," Hopewell says.
The deepwater Lower Tertiary play saw the most fervent bidding. Keathley Canyon attracted 36% of the apparent high bids, despite half of this protraction area having been "moved" into the Central planning area. The firm reports that interest in this area has been no doubt spurred by BP's Kaskida discovery in 2006.
The companies bidding in Sale 204 employed a variety of strategies. Hopewell says. "In the deep water, Statoil was the biggest spender, putting up a total of $139 million in apparent high bids to gain 36 blocks, albeit at the expense of leaving a substantial $73 million on the table."
Sale 204 was also notable by its absentees: no bids were placed by Hess or ExxonMobil, he adds.
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