American Oil and Gas Reporter - September 2018 - 37

Sale 251 Signals Brighter Future In Gulf
NEW ORLEANS-Gulf of Mexico
Lease Sale 251 generated $178 million
in high bids on 144 tracts covering
801,288 acres in federal waters of the
combined western, central and eastern
planning areas. A total of 29 companies
participated in the Aug. 15 sale, submitting $202.7 million in total bids, according to the U.S. Bureau of Ocean
Energy Management.
Lease Sale 251 was the third regionwide sale held under the 2017-22 Outer
Continental Shelf Oil & Gas Leasing
Program, with two sales scheduled each
year that include all available blocks in
the three planning areas. It also was the
largest to date, topping the previous two
region-wide sales by $57 million and
$53 million, respectively.
National Ocean Industries Association
President Randall Luthi says increased
bidding activity and bid amounts demonstrate both continued interest in deepwater
tracts and renewed interest in shallowwater acreage.
"The operating environment in the U.S.
Gulf of Mexico shows tangible signs of
improvement pointing to an industry that
is poised to shift into high gear," Luthi
comments. "Oil prices are higher, revisions
to overly burdensome regulations are in
the works, rig rates and supply chain prices
are more competitive, and companies have
improved the efficiency of their operations.
The results reaffirm the paradoxical state
of an offshore energy industry in slow recovery mode; the future is bright, but
shifting out of reverse takes time."
The sale included 14,622 unleased
blocks located from three to 231 miles
off shore in water depths ranging from
nine to more than 11,115 feet. Looking
at BOEM statistics by water depth, high
bids totaling $4.7 million were offered
on 32 leases in the shallowest waters,
less than 200 meters deep.
GulfSlope Energy Inc. was high bidder
on two, 5,000-acre shallow-water blocks
at Sale 251: Vermillion Area, South Addition Block 376 in 300 feet of water,
and Eugene Island Area, South Addition
Ship Block 371 in 400 feet of water.
"We are very pleased with the potential
addition of these two blocks to our position
of more than 55,000 acres in the Gulf,"
remarks John N. Seitz, GulfSlope Energy's
chief executive officer. "Both blocks hold
attractive subsalt targets and the Vermilion
South Addition has become an important
focus area for us, with GulfSlope currently
drilling at our Canoe shallow prospect
and planning under way for a subsalt test

at our Corvette prospect."
Rowan's Ralph Coffman high-spec
jackup spudded the GulfSlope-operated
Canoe No.1 well in early August in 325
feet of water on Vermilion Block 378,
targeting multiple above-salt Pleistocene
amplitudes that correlate to productive
zones in nearby producing fields, according
to Seitz. On Aug. 28, the company announced the well had encountered oil
sands in the northwest center of the block.
The well was drilled to a total of 5,765
feet measured depth.
The Ralph Coffman then was moved
to Ship Shoal Area, South Addition Blocks
336/351, where drilling on GulfSlope's
Tau subsalt prospect in 305 feet of water
was expected to commence in early September, Seitz reports. He adds that Tau is
the inaugural well in the first phase of
GulfSlope's subsalt drilling portfolio of
"high-potential prospects" targeting
Miocene reservoirs beneath thick salt
sheets in 300-400 feet of water on the
Shelf. At a planned depth of 29,860 feet
MD, Seitz notes that the Tau exploratory
well is projected to drill one of the thickest
sub-seafloor geologic sections in the
Gulf's history.
Driven By Deepwater
Turning back to Sale 251's bidding
activity by water depth, one block received
a bid of $5.2 million in the 200-400
meter category, while 13 blocks in 400800 meters of water attracted bids totaling
$8 million. The most sought-after leases
were in deep- and ultradeepwater, with
43 blocks in 800-1,600 meters receiving

bids totaling $57.4 million ($48.5 million
in high bids) and 55 tracts in more than
1,600 meters of water drawing a total of
$127.3 million in bids ($111.6 million in
high bids).
Hess Corp. submitted the highest bid
for a block, offering $25.6 million for
Mississippi Canyon 338 in more than
1,600 meters of water. The Hess offer,
which BOEM says also ranked as the
highest amount offered per acre ($4.5
million) at Sale 251, topped a $2.1 million
bid on the same block from a partnership
of LLOG Exploration, Red Willow Offshore and Deep Gulf Energy III.
The block receiving the most bids was
Green Canyon 437. Deep Gulf Energy
III's $1 million tender topped bids from
Hess, BP and Houston Energy.
Hess and Deep Gulf Energy III were
ranked among the top 10 companies based
on both the sum of high bids and the
total number of high bids submitted. Hess
was second on the list of top spenders
with 19 high bids totaling $26.2 million,
behind only Exxon Mobil's 25 bids totaling
$40.55 million. Chevron was the third
biggest spender with $18.8 million on
five tracts, followed by Equinor ($13.2
million), BP ($12.6 million), Anadarko
($12.5 million), Shell ($6.3 million), TOTAL ($5.8 million), Deep Gulf Energy
III ($5.5 million) and Walter Oil & Gas
Corp. ($5.4 million).
Including Hess Corp.'s $25.6 million
bid on Mississippi Canyon 338, six of
Sale 251's 10 highest bids were for tracts
in more than 1,600 meters of water, according to BOEM. Chevron offered $11.1

GulfSlope Energy Inc. was high bidder on two shallow-water blocks at Sale 251, including
a lease in Vermillion Area, South Addition, where Rowan's Ralph Coffman drilled GulfSlope's Canoe No. 1 in August targeting above-salt Pleistocene amplitudes. The rig then
was moved to Ship Shoal Area, South Addition to commence drilling a 29,728-foot MD exploration well on GulfSlope's Tau prospect targeting deep subsalt Miocene formations.
The Ralph Coffman is shown here last spring being loaded by Dutch Offshore Contractors
onto the Hua Hai Long heavy lift vessel for Cosco Heavy Transport in Pascagoula, Ms.

SEPTEMBER 2018 37

American Oil and Gas Reporter - September 2018

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