BP Wins Oil Leases in U.S. Gulf of Mexico Near Spill SiteKatarzyna Klimasinska
BP Plc was the high bidder on 43 leases to drill in the central Gulf of Mexico where two years ago its Macondo well exploded, causing the largest U.S. offshore oil spill. The U.S. auction raised $1.7 billion.
Royal Dutch Shell Plc offered $406.6 million, or 24 percent of all the bids, followed by Statoil ASA with $333.3 million, the Interior Department said. Stavanger, Norway-based Statoil bid $157 million for a single tract, a record in the region, Tommy Beaudreau, director of the department’s Bureau of Ocean Energy Management, said today. BP’s total bids were $239.5 million.
“As the largest leaseholder in the deep waters of the Gulf of Mexico, we remain committed to continuing investment in this important U.S. energy source,” Scott Dean, a BP spokesman, said today by phone.
The Obama administration, pressured by Republicans to boost domestic oil production, auctioned tracts off the coast of Alabama, Louisiana and Mississippi that it said may produce more than 1 billion barrels of oil. The previous auction in the central Gulf, about a month before the April 2010 BP disaster, raised $949.3 million for the U.S.
BP is acquiring leases in a region where the London-based company lost control of the Macondo well in a blowout that destroyed a $365 million drilling rig, killed 11 workers and spewed about 4.9 million of barrels of oil.
“Gulf of Mexico is back in business,” Interior Secretary Ken Salazar said as the sale began today in New Orleans. He said the companies can begin preparing for exploration immediately.
Chevron Corp., Exxon Mobil Corp., Apache Corp., LLOG Exploration Offshore LLC, Stone Energy Corp., Noble Energy Inc. and ConocoPhillips were among the 10 biggest bidders, according to a list posted today on the Interior Department website.
The administration is opening the central Gulf as Republicans in Congress demand accelerated domestic output to add jobs and reduce dependence on overseas sources. The BP oil spill prompted an overhaul of rules for deepwater drilling after a six-month halt in the Gulf to review safety.
“If we continue to drill in the Gulf of Mexico, especially in deep water, we will have another spill,” Jacqueline Savitz, vice president for North America at Washington-based environmental group Oceana, said in a phone interview today.
Leases in waters deeper than 1,600 meters (5,250 feet) accounted for more than 53 percent of all the high bids, or $906 million, and almost 10 times more than tracts in water 400 meters or shallower, according to the Interior Department.
Production in the Gulf region increased 6.2 percent to 1.41 million barrels a day in March, and represented more than a fifth of the U.S. crude production for the month, according to the Energy Department.
With oil trading at about $80 a barrel on global markets, the Gulf of Mexico is the world’s most profitable place to produce oil, because other nations set higher taxes on oil companies, said Fadel Gheit, an analyst at Oppenheimer & Co. in New York.
“Whether it’s the U.K., whether it’s Algeria, Nigeria, West Africa, Russia, anywhere you go, the effective tax rate is very high,” Gheit said in an interview. The Gulf “is well developed, the whole area is basically very well mapped, there are not too many surprises, the industry has all the services needed.”
Following the BP disaster, the Interior Department revamped its oversight of drilling, dividing the leasing function from enforcement of safety rules and collection of production royalties. The department also added standards on well design, casing and cementing, and introduced a requirement for subsea oil-spill containment system.
A nonprofit group commissioned by the agency also recommended that U.S. inspectors be allowed to fly to rigs on company-leases helicopters and live for a time with workers, the National Research Council said in report released yesterday.
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