Power hungry U.S. is expanding its domestic presence to tap offshore oil resources. This is a prudent move considering the U.S. agency of the Bureau of Ocean Energy Management’s (:BOEM) assessment that the deep water space oil production is predicted to grow 12% annually till 2030. The agency also expects the majority of action in the deep water space 2015 onward.
Keeping this in mind, the federal government has ventured to sell more than 400,000 acres in the Gulf of Mexico (GoM) off the Texas coast for oil and gas exploration and development. The acreage represents a fraction of 21.6 million acres the agency had offered as part of the Obama administration's five-year program to aggressively develop resources on the Outer Continental Shelf. Offerings since 2012 in the western Gulf attracted buyers for about 60 million offshore acres, adding about $2.3 billion to the U.S. Treasury.
Per BOEM’s western GoM Deputy Director Michael Celata the sale, if approved, will bring in about $110 million. Bidders must prove their financial capacity to complete the sale, assure continued participation and submit exploration and development plans within 90 days to close the purchase process.
Of the energy behemoths, BP plc (BP) submitted the largest number of bids, winning 27 of the 81 tracts that were sold. It was the first sale in the western Gulf that BP participated in since the Environmental Protection Agency barred the company in Dec 2012 from bidding on U.S. contracts for 16 months in the wake of the Deepwater Horizon rig explosion and oil spill in 2010. ConocoPhilips (COP) also dished out considerable money in the fray, paying about $61 million for a single tract in the ultra-deep-water Alaminos Canyon area.
All this focus on hydraulic fracturing activity, which is projected to grow in the western Gulf of Mexico by more than 10% in 2014, will greatly benefit oilfield services providers like Baker Hughes Inc. (BHI), Halliburton Co. (HAL) and Schlumberger Ltd. (SLB).
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