Oil lease sale for tracts off Texas

NEW ORLEANS, Aug 19, (AP): The federal government on Wednesday will offer 21.9 million acres off the Texas coast to oil and gas developers, though low oil prices are likely to limit interest.

The last two comparable lease sales in the western Gulf of Mexico brought $109.1 million last year and $100.1 million in 2012.

A March 18 sale in the far more popular central Gulf of Mexico brought the lowest number of bids since 1986. Officials said low oil prices were the reason. Since then, the price of US crude has dropped $1.44 a barrel.

The National Ocean Industries Association, an offshore trade group, said in a news release Tuesday that members looked forward to the lease sale “but do not anticipate jaw-dropping results under current conditions.”

The group cited low prices, uncertainty over new regulations — including stronger rules proposed for equipment designed to prevent oil well blowouts — and an upward trend in lawsuits over permits and leases.

US crude fell 22 cents Tuesday to $41.65 per barrel in electronic trading on the New York Mercantile Exchange. The price was $43.09 on March 18, when companies made 195 bids on 169 tracts off Louisiana, Mississippi and Alabama, with $538 million in high bids.

Some of those bids may be withdrawn or rejected.

In last year’s sale in the central Gulf, companies offered $850.8 million in high bids. Five were rejected or withdrawn, dropping the total to $845.9 million — from $1.2 billion in 2013 and $1.7 billion in 2012.