Gulf oil-gas auction bids down from last summer

WASHINGTON — A federal auction for offshore oil and gas leases in the Gulf of Mexico on Wednesday drew less than $160 million in wining bids, 10 percent less than last summer’s auction.

The decline comes as the U.S. benchmark West Texas Intermediate has traded around $57 a barrel this month, down from $71 a barrel the same time last year.

“Bidding activity today may reflect the slower than desired improvement in prices,” said Nicolette Nye, spokesperson for the National Ocean Industries Association, a trade group representing the offshore oil and gas industry. “The somewhat modest results of lease sale 253 reflect the cautiously optimistic attitude of an offshore industry still in recovery.”

More than 835,000 acres in the Gulf were auctioned, with the Australian mining and oil conglomerate BHP setting the highest bid for a single block at $22.5 million.

The result dampened enthusiasm for a Gulf region that is facing increasing competition from domestic shale fields in West Texas and North Dakota, as well as deepwater offshore fields off the coasts of Brazil and Mexico.

But the Trump administration remained upbeat on the future of the Gulf, pointing out that when combined with March’s auction, which drew $244.3 million in winning bids, 2019 has been the most successful for offshore leasing since 2015.

“The Gulf of Mexico continues to be a critical part of our nation’s energy infrastructure,” said Interior Deputy Assistant Secretary Andrea Travnicek. “We are excited about the results from today’s lease sale, which show a continued upward trend for the year.”