Oil Companies Vying For More OffShore Tracts In Gulf Of Mexico

The U.S. Department of the Interior on Wednesday will open up the first sale of Gulf Coast leases since the BP Macondo disaster, and the first since the drilling moratorium was lifted.

The sale will take place at at the Mercedes-Benz Superdome of New Orleans.

The offering has garnered a larger list of players than during the previous sale. Twenty companies filed 241 bids for 191 tracts of offshore Texas real estate, according to the Bureau of Ocean Energy Management, which manages the sale of leases in the Gulf.

When compared to the last sale, which took place in August 2009, Wednesday's sale appears to show a modest increase in the interest in offshore drilling in the Gulf.

When the lease sale was first announced this fall, Erik Milito, the group director of upstream and industry operations with the American Petroleum Association, said the association welcomed the sale but cautioned against any measures that could hurt companies' investments in the region, such as a price increase that was prompted by the Macondo spill.

As part of new stringent leasing and drilling regulations, the Obama administration rose the minimum bid for deep-water tracts, now measured at 400 feet and deeper, from $37.50 to $100 dollars.

Despite our concerns, we look forward to this and other offshore lease sales, which continually serve to highlight the industry's commitment to develop American resources while spurring the economy, said Milito in August.

The Department of the Interior initially put 3,913 offshore tracts available for bids but 95 percent of the tracts did not receive any. The Bureau of Ocean Energy Management noted, however, that companies will be bidding on more tracts than they did in 2009.

[The bids] look promising, Milito told the International Business Times. I think what we are seeing is an industry that remains committed in investing in U.S resources.

Milito said a company typically invests $120 million per well just to drill a well.

This is good news, he said. You need these sales to have a comprehensive energy strategy.

The tracts receiving bids total more than 1 million acres and range from 9 to 250 miles offshore in depths of 16 to 10,975 feet. Estimates place the number of recoverable resources at 222 to 423 million barrels of oil and 1.49 to 2.65 trillion cubic feet of natural gas, according to BOEM.

The majority of the tracts receiving bids, according to BOEM, are deep water tracts at depths ranging between 2624.6 and 5249 feet which are expected to last for 7 years.