Barrel Blog | Starr Spencer | November 6, 2017
US Gulf of Mexico Lease Sale 250, scheduled for next year, was touted last month as the largest such auction to be offered in the nation’s history—but Trump Administration touters may have confused an offering with an outcome.
True, the event—tentatively slated for March 2018—will feature 77 million acres in federal waters offshore Texas, Louisiana, Mississippi, Alabama and Florida in the second region-wide US Gulf sale since 1983. That’s a lot of acreage, although it was only about 1.5% more than in the most recent auction—Sale 249—in August.
But simply serving up a lot of acreage does not necessarily mean a significant amount of money will be offered for it. And at a time of relatively low crude oil prices when US Gulf offshore exploration is scanty, operators have largely chosen to focus onshore —specifically quick-return shale plays rather than long-lead major projects that can take many years to develop.
“Offering more acreage will not do the trick” of attracting money back into exploration in the Gulf of Mexico, where operators are looking for faster payouts,” said S&P Global PIRA Energy analyst Rene Santos. “You also really need higher oil prices.”
Nor will more acreage bring bigger bids.
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