Lease Sale 259 attracted $263.8 million in high bids for 313 tracts covering 1.6 million acres in federal waters of the US Gulf of Mexico. A total of 32 companies participated in the lease sale, submitting around $309.8 million in total bids.
The sale offered approximately 13,600 unleased blocks, approximately 73 million acres, in the Gulf’s western, central, and eastern planning areas.
Both Mississippi Canyon Block 386 and Atwater Valley Block 6 received four bids each — representing the most competitive tracts in the sale.
“Lease Sale 259 was more optimistic than the prior sale, with 30 blocks receiving competitive bids," said Justin Rostant, principal research analyst at Wood Mackenzie. "The majors participated in a big way at the lease sale, bidding on 70% of the 313 blocks, and their high bids were 77% of the total. We expected to see an uptick in the activity as it has been almost 18 months since the last lease sale.”
According to Rostant, Chevron was the most aggressive bidder with $104 million in high bids, more than all the other majors combined. The operator also had the high bid of the lease sale, spending $15 million on Keathley Canyon Block 96, which it previously operated and has the Gibson discovery. Chevron beat out BP in a competitive bid, who was previously the partner in the block. Chevron also stood out in the Atwater Valley protraction area, bidding on 28 blocks.
“ExxonMobil added 69 blocks on the shelf, adding to the 98 blocks it acquired at the last lease sale," added Rostant. "The major has plans for a CCS project in the Houston Ship Channel area and these bids are likely in support of this project, but the regulatory process for using oil and gas leases for carbon storage is uncertain.”
Sale 259 was conducted by the US Bureau of Ocean Energy Management (BOEM) as required by congressional direction in the US Inflation Reduction Act of 2022.
Leases resulting from this sale will include stipulations to mitigate potential adverse effects on protected species and to avoid potential conflicts with other ocean uses in the region.
Revenues received from offshore oil and gas leases (including high bids, rental payments, and royalty payments) are directed to the US Treasury, certain Gulf Coast states (Texas, Louisiana, Mississippi, and Alabama) and local governments, the Land and Water Conservation Fund, and the Historic Preservation Fund.
There is currently no traditional Five-Year Program for federal offshore leasing in place. The Interior Department let the last plan lapse around 9 months ago with no immediate replacement. The delay and uncertainty over the next offshore leasing program puts the US in the position to have a substantial gap between congressionally mandated leasing programs for the first time since the process started in the early 1980s.
BOEM's detailed information about the bids is available here.
