Oil industry interests expressed optimism after Wednesday’s Gulf of Mexico lease sale attracted more winning bids than the last one.
Companies submitted $121 million in high bids, up from the $98 million the federal government received in March when the COVID-19 pandemic sparked a global decline in demand for oil and gas, The Daily Advertiser reports.
“Today’s lease sale shows industry interest remains strong in the Gulf of Mexico despite the challenges of an uncertain economic environment, and this basin will continue to be an important player in providing energy for America,” Tyler Gray, president of the Louisiana Mid-Continent Oil and Gas Association, said in a prepared statement.
Nonetheless, the 23 companies submitting bids sought drilling rights on less than 1% of the more than 79 million acres offered, according to the federal Bureau of Ocean Energy Management.
Total winning bids were also down from the $159 million received in August 2019. On Wednesday, companies submitted 105 bids on 98 tracts, a tiny fraction of the nearly 15,000 tracts offered.
Results have been similar for the past several lease sales as the pandemic, global production wars and an inland shale boom helped make the Gulf less attractive to drillers.
Oil company budgets are limited, and many operators already have leases in reserve, Platts analyst Sami Yahya said in the report. Many are working to reduce debt and cut costs to offset the pandemic’s impact. Read the full story.