MMS reviews sale leases in the western Gulf of Mexico

Dec 11, 1997 01:00 AM

The U.S. Interior Department's Minerals Management Service (MMS) has said it has rejected 26 bids initially accepted in August when the agency awarded offshore oil and natural gas leases in the western Gulf of Mexico.
The bids, which were worth $ 16.3 million, were rejected during the MMS' final evaluation of all the bids it received from 82 companies for leases offshore Texas and Louisiana. The MMS said the rejected bids fell short of the fair market value the agency had placed on the relevant tracts.
The value of all the bids accepted in the lease sale has now been cut to $ 599.6 mm, the MMS said. The sale is still a record for the western Gulf of Mexico, with 1,224 bids received for 804 tracks. Each track is about nine square miles.
Shell was the biggest winner in the lease sale, capturing a combined 116 tracts, according to the MMS.
A unit of BP had the second largest single winning bid with 79 tracts, followed by Exxon with 66 tracts and Chevron with 64 tracts.
The other top winning bids came from Unocal (43 tracts), Texaco (18 contracts) Amoco (13 tracts), Dupont's Conoco unit (13 tracts) and Sun Operating (12 tracts).
Because of the record-breaking lease sale, MMS was unable to evaluate all the bids within its normal 90-day review period, and therefore took several more weeks to look over the bids.
Many of the bids came from tracks located in water from 6,000 to 10,000 feet deep. Regional MMS spokesman Barney Congdon attributed those bids to recent incentives passed by Congress that encourage companies to drill in deep water by exempting their initial oil and natural gas finds from royalties.
The next MMS lease sale for the Gulf of Mexico encompasses 4,244 blocks in 22.85 mm acres offshore Louisiana, Mississippi and Alabama. Winning bids will be announced March 18, 1998.
Estimates of undiscovered, but recoverable, energy resources on the unleased tracts in the area range from 2.44 to 2.84 bn barrels of oil and 36.91 to 39.42 tcf of natural gas.

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