Major oil producers have consistently bid for an increasing number of blocks on the last four lease sales under the US 2017-2022 National Outer Continental Shelf Oil and Gas Leasing Program.
Gulf of Mexico oil production
During the last lease sale, the popular Green Canyon and Mississippi Canyon areas, which are well serviced by existing infrastructure, received the most bids. Block Mississippi Canyon 801 had the highest single bid on a block, from Equinor amounting to $24.5 million.
The Gulf of Mexico will remain a reliable region for major oil producers, with its undeveloped reserves, its well-connected infrastructure and its unexplored areas, such as the De Soto Canyon area.
On 20 March 2019, the US Secretary for Land and Minerals Management and the Bureau of Ocean Energy Management (BOEM) announced the results of the region-wide Gulf of Mexico Lease Sale 252, covering 78 million acres.
The sale offered 14,699 blocks of which 227 blocks received bids, covering 1.26 million acres. The bidding results yielded more than $244 million in high bids and reflect a continued upward trend for the last four lease sales.
Sum of high bids and received bids on lease sale 252
Source: GlobalData, Oil &Gas
The overall result was successful with the total bidding value amounting to just about the double of last year Lease Sale 250 in March 2018. The success was also reflected in the interest shown by both international oil companies (IOCs) and smaller independents producers. These included Shell, Chevron, BP and Hess among the IOCs; Anadarko and LLOG among the independents.
The results of Lease Sale 252 were relatively strong and reflected a trend in offshore development strategies. Moreover, the US Gulf of Mexico remains a prolific basin with mature infrastructure and sophisticated support industry in spite of the increasing competition from lower-cost opportunities with shorter lead times to production, in particular from onshore shale.
In addition, the offshore industry has been focused on controlling and reducing costs and lowering break-even prices, through developing fields as tie-backs, reducing well drilling and completion time, and optimising the bidding process for equipment.