Page 9 - NorthAmOil Week 46 2021

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Lease sale 257 was the
most active lease sale
since 2014 in terms of
the number of leases
sold.

Gulf lease sale attracts $192mn in high bids

GULF OF MEXICO THE federal US Gulf of Mexico lease sale held The results of the lease sale also reflect the
this week attracted $191.7mn in high bids for impact of higher oil prices, with crude futures
308 blocks. It was the most active lease sale since up 95% in the last 12 months. The auction raised
2014 in terms of the number of leases sold, and more money than most of the lease sales con-
the amount raised was the highest since 2019. In ducted under former US President Donald
total, 317 bids were submitted by 33 companies, Trump, despite his efforts to promote unre- The results of the
worth a combined $198.5mn. stricted oil and gas development.
The lease sale was the first to be held under Chevron was a top bidder in Lease Sale 257, lease sale also
US President Joe Biden, whose administration spending $47.1mn. ExxonMobil, meanwhile,
had tried to hold up federal leasing auctions was the largest buyer by acreage, submitting 94 reflect the impact
while it carried out a review of their environ- high bids for shallow-water acreage for $14.9mn.
mental impact. However, the leasing pause was ExxonMobil’s bids prompted speculation that of higher oil
challenged in court, and in June a federal judge the super-major could be buying the leases for prices.
blocked it, ordering the Biden administration to carbon capture and storage (CCS) development,
resume lease sales. rather than the production of hydrocarbons. The
The Biden administration is appealing against company has not commented on its plans for
the decision, but has agreed to resume lease sales the leases, beyond saying it was evaluating their
in the meantime. The findings of its review into geology for future commercial potential. How-
federal leasing have not yet been published, and ever, analysts commented that the purchase did
their impact remains uncertain, but Biden had not necessarily make sense for ExxonMobil from
pledged to end federal land and in federal waters an oil and gas production point of view.
during his presidential campaign – a move he This comes after ExxonMobil unveiled a
may yet come back to. proposal for a $100bn CCS hub to capture emis-
This did not deter bidders in Lease Sale 257, sions from refineries and industrial operations
however. Indeed, it may be the case that they are along the Houston Ship Channel. The plan
snapping up leases now on the assumption that would involve collaboration with other compa-
they will be able to develop the ones they hold nies, as well as government funding, which the
already, even if new federal leasing is stopped. super-major has called for.™

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