Fri | May 25, 2018

Dismal oil lease bids linked to low prices

Published:Friday | August 26, 2016 | 12:00 AM

A federal official says low oil prices are the reason few companies were interested in bidding in the latest oil lease sale for the Gulf of Mexico.

The regional director for the Bureau of Ocean Energy Management, Michael Celata, says the US$18-million sale was below last year's record low in total money offered, number of bids and number of companies participating.

Last year, the same area off the Texas coast attracted 33 bids from five companies for a total of US$22.7 million.

None of the bids was competitive, either this year or last.

Celata says all bids are reviewed to make sure the government is getting fair market value, a process that can take up to 90 days, and bids considered too low will be rejected.

The federal government's first livestreamed oil lease sale suffered from a video glitch, in addition to extremely low interest. Only three companies bid for a tiny fraction of the leases available in the Gulf of Mexico.

The bureau got bids for just 24 of nearly 4,400 tracts offered. That's even fewer than last year, when 33 tracts attracted bids. And just like last year, there was only one offer per tract.

The bureau had sought to broaden its audience by livestreaming its lease sales. Officials say they don't know how many people watched.

Bureau of Ocean Energy Management director Abigail Ross Hopper read the first two bids and was about to read another when she said, "We will pause for a moment."

Several minutes then went by while the screen displayed messages such as "memory full" and "all scenes - now deleting".

Bids were offered by BP Exploration and Production Inc, BHP Billiton Petroleum Inc, and Exxon Mobil Corp.

- AP