The Latest: Officials: Still interest in Gulf of Mexico oil

AP News
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Posted: Aug 19, 2015 6:40 PM

NEW ORLEANS (AP) — The latest on the federal oil lease sale Wednesday in the western Gulf of Mexico, off the Texas coast (all times local).

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4:20 p.m.

The big bidder in Wednesday's oil lease sale for tracts off the Texas coast says it's very pleased with the outcome.

BHP Billiton Petroleum bid nearly $16.3 million for 26 of the 33 tracts auctioned Wednesday.

Exploration president David Rainey says in an email from London, "In BHP Billiton, we believe that the Gulf of Mexico has significant remaining resource to be found."

He says that the company will invest where it sees potential profit even during hard times for the industry.

BHP Billiton Petroleum is an arm of BHP Billiton Ltd., listed in London and Australia.

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4:20 p.m.

Louisiana Oil and Gas Association President Don Briggs says Wednesday's tiny oil lease sale clearly indicates that crude oil prices are unprofitable.

But he says bids by five companies show continued commitment to the Gulf of Mexico despite difficult times.

The 33 bids totaled less than $23 million.

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11:45 a.m.

Federal and trade group officials say there's still interest in Gulf of Mexico oil and gas, despite low figures from Wednesday's lease sale for tracts off the Texas coast.

Bureau of Ocean Energy Management official Mike Celata (sel-AH'-tuh) says the bureau is not considering a cut in oil company royalty payments to encourage more bidding. And he notes that the oil business tends to run in cycles.

Celata says the 26 bids submitted by BHP Billiton Petroleum (Deepwater) Inc. indicate long-term potential for business in the Gulf.

He and National Offshore Industries Association President Randall Luthi both say there's continuing interest in the larger central Gulf, especially in deep water.

Luthi says the western Gulf draws less interest because it tends to produce natural gas, which pays less than oil.

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9:20 a.m.

Low oil prices contributed to the smallest oil lease sale in the Gulf of Mexico off of Texas since the federal government began regional sales in 1983.

Five companies bid a total of less than $23 million on 33 tracts in the western Gulf on Wednesday. Each tract got a single bid, and BHP Billiton Petroleum (Deepwater) Inc. made 26 of the bids.

The smallest sale in that area before Wednesday was in 1986, when $56.8 million was bid on 41 tracts.

BP Exploration and Production Inc. made a single bid. Ecopetrol America Inc. made one on its own and three together with Anadarko US Offshore Corp., and Peregrine OI7 Gas II LLC made two.

An offshore industries trade group said Tuesday that low oil prices were among factors likely to depress interest in the sale.

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7:10 a.m.

The federal government is offering nearly 22 million acres off the Texas coast to oil and gas developers, though low oil prices are likely to limit interest.

The sale is scheduled for Wednesday. The last comparable lease sales in the western Gulf of Mexico brought in $109.1 million and $100.1 million.

A March sale in the far more popular central Gulf of Mexico brought the lowest number of bids since 1986, and officials said low prices were the reason. Since then, the price of U.S. crude has dropped $1.44 a barrel.

An offshore trade group said in a news release Tuesday that members look forward to the sale "but do not anticipate jaw-dropping results." The National Ocean Industries Association cites low prices, uncertainty over new regulations and an upward trend in lawsuits over permits and leases.

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This story has been corrected to show in the short headline that 5 bidders were part of sale, not 5 bids.