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UpstreamOnline: Gulf lease sale sets a record

Anthony Guegel

High bids at today’s annual lease sale for the western Gulf of Mexico in New Orleans represented the highest total value received in eight years.

Minerals Management Service (MMS) Gulf of Mexico regional director Chris Oynes said a total of $340,935,514 in high bids were offered for the services Lease Sale 200.

The total value of bids received amounted to $462,760,912, Oynes said.

Those figures are well in excess of the August 2005 western Gulf sale, in which $285.1 million in high bids were received and the sum of all bids was $335.6 million.

The highest bid of the sale was BP’s offer of over $21 million for Keathley Canyon Block 58, beating Chevron, Shell and Petrobras for the prize.

Garden Banks Block 654 attracted the most bids of the sale: seven. A partnership of Kerr-McGee (now Anadarko) and Plains Exploration was the apparent winner of that block with a high bid of $8 million.

Some of the biggest names in the industry were players in the sale, including BP, Shell, Chevron, Petrobras, Hess, Hydro Gulf of Mexico and Total. Cobalt International Energy made a big splash with bids in the Gulf deep, including its own highest offer of $8.2 million for Garden Banks Block 959.

Before the sale the MMS said 52 companies participated, submitting a total of 541 bids on 381 blocks out of 3865 tracts available for bid.

Now it remains to be seen if the results will stand. Besides the customary MMS evaluation to verify each tract received fair market value, the entire sale is subject to a federal court case thanks to a challenge by Louisiana Governor Kathleen Blanco to halt the lease sale.

The governor’s office accuses the MMS of violating various federal statutes by moving forward with the sale in spite of the “fragile coastal landscape” devastated by Hurricane Katrina last summer.

Blanco has also been pushing the federal government to share the spoils of offshore oil and gas extraction with her state.

Blanco has claimed presiding court judge Kurt Englehardt may be inclined to rule in the state’s favour by pointing to a statement by the judge that there was “a substantial likelihood of success on the merits” of the case.

The American Petroleum Institute had asked the judge to keep the bids sealed in case the sale was cancelled but the judge denied the request. and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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