Update: Oil lease sale Wednesday for tracts off of Texas

Janet McConnaughey, Associated Press

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.

NEW ORLEANS (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 U.S. 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.

U.S. 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Some of those bids may be withdrawn or rejected.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 Five were rejected or withdrawn, dropping the total to $845.9 million — from $1.2 billion in 2013 and $1.7 billion in 2012.

Updates as of 9:20 a.m.

9:20 a.m.

Low oil prices contributed to the smallest oil lease sale in the Gulf of Mexico off of Texas since the federal government began regional sales in 1983.

Five companies bid a total of less than $23 million on 33 tracts in the western Gulf on Wednesday. Each tract got a single bid, and BHP Billiton Petroleum (Deepwater) Inc. made 26 of the bids.

The smallest sale in that area before Wednesday was in 1986, when $56.8 million was bid on 41 tracts.

BP Exploration and Production Inc. made a single bid. Ecopetrol America Inc. made one on its own and three together with Anadarko US Offshore Corp., and Peregrine OI7 Gas II LLC made two.

An offshore industries trade group said Tuesday that low oil prices were among factors likely to depress interest in the sale.

___

7:10 a.m.

The federal government is offering nearly 22 million acres off the Texas coast tooil and gas developers, though low oil prices are likely to limit interest.

The sale is scheduled for Wednesday. The last comparable lease sales in the western Gulf of Mexico brought in $109.1 million and $100.1 million.

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

An offshore trade group said in a news release Tuesday that members look forward to the sale "but do not anticipate jaw-dropping results." The National Ocean Industries Association cites low prices, uncertainty over new regulations and an upward trend in lawsuits over permits and leases.

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