Bidders largely ignored court challenges to additional petroleum drilling off the coasts of Texas and Louisiana and made $340.9 million in high bids for 381 offshore tracts as part of Lease Sale 200.
The bid total was the highest in eight years for the federal government's annual sale of exploration leases in the western Gulf of Mexico. In last year's sale, the Minerals Management Service accepted $283.4 million on 342 tracts. Foreign-owned companies were among the top bidders.
Petrobras America Inc., a subsidiary of the Brazilian national oil company Petrobas and a major player in Gulf lease sales since 2004, was the highest total buyer, putting in 34 winning bids valued at $45.5 million. BP Exploration & Production Inc., a subsidiary of BP PLC, followed with 31 winning bids totalling $37.5 million, while Shell Offshore Inc., a subsidiary of Royal Dutch Shell PLC, put up 28 winning bids worth $35.4 million.
Despite a lawsuit filed by Louisiana Gov. Kathleen Blanco to halt the sale, no bids were withdrawn ahead of Wednesday's auction, said Chris Oynes, MMS regional director for Gulf operations. Oynes discounted the possibility that many bidders were discouraged from entering the sale at all. "It's pretty small if there's any at all," he said.
This year's sale attracted 62 bidding companies, up from 51 in 2005.
Blanco, as part of a campaign to get a bigger share of federal offshore royalties for Louisiana, filed a lawsuit claiming MMS has not done enough to protect Louisiana wetlands from damage due to drilling. She sought an order blocking Wednesday's sale.
U.S. District Judge Kurt Engelhardt on Monday refused to block the sale, but said the state would have a strong case when the dispute goes to trial in November. Engelhardt also rejected an American Petroleum Institute attempt to block the bids from being opened until the suit is decided.
Oynes would not discuss possible long-term effects if Blanco wins her suit. But he said MMS hopes to meet with administration officials and "have a full and vigorous discussion with the state and satisfy the state and the courts."
The state now receives less than 2% of the royalties from oil and natural gas produced in the Gulf. In 2005, that totalled about $30 million. Blanco and members of Louisiana's congressional delegation are demanding more.
Of the tracts receiving bids, 218 were in ‘ultra-deepwater’ depths of at least 800 metres. The highest bid for a single tract was $21 million by BP Exploration and Production in a mostly undeveloped, ultra-deepwater area of the Gulf known as Keathley Canyon.
Another 107 tracts were in depths of 200 metres or less, considered prime ground for the development of natural gas. Those areas were developed years ago and largely abandoned before technology advances and high gas prices lured exploration companies back.
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