American Oil and Gas Reporter - April 2020 - 18

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IndustryDigest
Gulf Lease Sale 254
Brings In $93 Million
NEW ORLEANS-The Bureau of
Ocean Energy Management's latest
lease sale generated $93 million in high
bids for 71 tracts covering 397,285
acres in federal waters in the Gulf of
Mexico. The bureau says 22 companies
participated in the March 18 lease sale,
submitting $108 million in total bids.
Lease Sale 254 included 14,594
unleased blocks located from three to
231 miles offshore, in the Gulf's
Western, Central and Eastern Planning
Areas, in water depths ranging from
nine to more than 11,115 feet, BOEM
describes. It was the sixth offshore sale
held under the 2017-22 Outer
Continental Shelf leasing program. Ten
regionwide sales are schedule for the
Gulf under the program.
In recognition of current pricing
conditions, the bureau says leasing
terms include a 12.5% royalty rate for
leases in depths less than 200 meters,
and 18.75% for all other leases issued
under the sale.
BHP Billiton Petroleum (Deepwater)
Inc. submitted the highest bid for a
block, $11.1 million, for Green Canyon
Block 80.
BP Exploration & Production Inc.
led all companies with 16 high bids,
totaling $10.4 million. Other high
bidders were:
· Chevron USA Inc. (15 bids, $24.7
million);
· Shell Offshore Inc. (seven bids,
$18.5 million);
· BHP Billiton (six bids, $19.9
million); and
· Equinor Gulf of Mexico LLC
(five bids, $3.6 million).
Mfon Usoro, a senior research
analyst with Wood Mackenzie's Gulf of
Mexico upstream team, says with the
drop in oil prices, the bidding amount
was no surprise. She points out this sale
is the first time the total high bid
amount came in below $100 million
since the regionwide lease sales began
in 2017.
"We think more lease sales are still
in the cards, but higher oil prices will be
required for bid amounts to climb back
to historical norms. Otherwise this sale
result will continue with even lower
bidding activity," she predicts.
This latest lease sale shows the
importance of long-term offshore
18 THE AMERICAN OIL & GAS REPORTER

energy production, argues Erik Milito,
president of the National Ocean
Industries Association.
"While bidding did take a tough hit,
it could have been substantially worse
because of the unprecedented near-term
financial constraints imposed by the
COVID-19 virus and the oil price war
between Saudi Arabia and Russia,"
Milito suggests. "Long-term projections
for energy demand, including oil and
natural gas, show strong growth for the
foreseeable future. Offshore projects are
undertaken with the long-term outlook
in mind." ❒

OTC Canceled This Year,
But Papers Will Be Online
HOUSTON-To minimize the spread
of coronavirus, the Offshore
Technology Conference has canceled its
2020 event. To preserve the significant
work of the program committee and
authors, OTC says the technical papers
and presentations will be made
available on onepetro.org.
"As we navigate these difficult and
uncertain times, it is with a heavy heart
that the OTC Board of Directors has
determined it is in our best interest to
cancel OTC 2020. Our priority is the
health and safety of our attendees and
exhibitors, and we have taken federal,
state and local guidelines into account
in making our decision," says OTC
Chairwoman Cindy Yeilding.
She continues, "On behalf of the
OTC Board of Directors, we would like
to thank the staff, authors, partners,
volunteers, students, teachers and all
involved with OTC for the dedication
and hard work they have contributed to
the 2020 event. As we face this
uncharted territory, we remain confident
of OTC's critical role in the offshore
industry's future and eagerly anticipate
a robust OTC 2021." ❒

North Dakota Waives
Idle Well Requirements
BISMARCK, N.D.-North Dakota oil
operators are due to receive some relief
from state regulations on temporarily
idle wells, as the North Dakota
Industrial Commission directed the
Department of Mineral Resources to
immediately reinstate three guidelines

providing more options.
State regulations require wells that
do not produce for a year to either
resume production or be permanently
plugged. North Dakota allowed the
waivers from 2015 to 2017. From
December to January, media reports
indicate, producers idled nearly 700
wells.
Under the new policy, each waiver is
good for one year, and operators will be
allowed to apply for renewal until West
Texas Intermediate prices exceed $50 a
barrel for 90 days, Mineral Resources
Director Lynn Helms says.
· The not completed well waiver
allows operators to apply for not
completed well status, NDIC says,
explaining that covers those wells that
have been drilled but have unperforated
casings.
· Inactive well status may be given
to wells that have met certain criteria,
including providing documentation
stating why the well is inactive and a
statement that it is uneconomic to
produce at current crude oil prices.
· The suspension of drilling waiver
allows operators to apply for temporary
abandoned surface casing status. This
only may be given to wells that have
surface casing set and cemented, and
that are properly secured until a drilling
rig can complete the well and equip it
for completion operations.
Helms explains the state is
strengthening its regulations on
abandoned wells to help minimize the
number of companies that fail to plug
those wells.
NDIC says the guidelines have been
posted to the Department of Mineral
Resources website since April 1. ❒

Rulings: More Review
For Dakota Access;
Permian Line Advances
WASHINGTON-The U.S. Army
Corps of Engineers must complete an
environmental impact statement for the
part of the Dakota Access Pipeline
running under the Missouri River, a
federal judge has ruled.
The pipeline, owned by Energy
Transfer Partners, runs 1,170 miles from
Stanley, N.D., to an oil tank farm near
Patoka, Il. It crosses beneath the
Missouri River just north of the
Standing Rock Sioux Reservation.
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American Oil and Gas Reporter - April 2020

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