Leslie Turk

Gulf lease bids plummet

by Leslie Turk

The recent uptick in oil prices to above the $50 range was certainly not enough to help yesterday’s central Gulf of Mexico lease sale come anywhere near last March's.

Winning bids plummeted about 80 percent from this time last year, when 85 energy companies submitted 1,057 bids totalling a whopping $3.67 billion. Yesterday the 406 bids 70 companies placed brought only $703,000.

The fall comes on the heels of roughly $7 billion netted in the last three Gulf lease sales, including two that broke records, says Mid-Continent Oil and Gas Association President Chris John, who characterized yesterday's mood of companies as “very subdued.”

“All the deep water players were there,” John says, “but there was not near the level of excitement [of the past three sales].” He blames the uncertainty of the political climate in Washington, D.C., in particular a proposal to increase fees on Gulf drilling, along with the global economic slowdown and low commodities prices. “When you package all of them in, you see the result of that,” he says.