Gulf Drill Auction Leases Mostly Deepwater Tracts

The auction in New Orleans brings the year’s total Gulf drilling lease revenues to $2 billion.

The federal government auctioned drilling rights to 20 million acres of land in the Gulf of Mexico on Nov. 28 in the third oil and gas lease sale this year. Deepwater tracks attracted most of the bids.

The 131 bids on the 116 blocks of available land totaled $157.8 million, although the government expects to collect $133.8 million in high bids. Only $4.6 million of the bids were for areas not considered to be deepwater -- 11 of the 116 blocks.

Officials involved in the lease said safety is of great importance as these companies move to their new blocks in the Gulf. In fact, this auction came hours after a ruling barred BP from any new federal drilling contracts because of the Deepwater Horizon spill during 2010. Thus, BP did not participate in this auction.

Another recent incident was a fire on a Black Elk Energy Offshore Operations LLC platform in shallow water in the Gulf on Nov. 16 that killed three of the rig's workers. That Houston company posted a statement Nov. 29 saying Louisiana officials had confirmed the identity of one of the workers, Jerome Malagapo, who was found Nov. 26. "Our thoughts and prayers are with his family. We continue to work in close cooperation with government officials to understand exactly what happened in this incident," the statement said.

The last sale in December 2011 garnered $324 million in revenue for the government.

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