NEW ORLEANS, Aug. 20 (UPI) -- While low interest in a lease for oil and gas drillers in the U.S. Gulf of Mexico was expected in this market, the region is still a priority, an official said.
Just five companies came forward with bids on the 33 tracts on the auction block in New Orleans. Though the lease sale drew in more than $20 million in high bids, the industry interest was suppressed as companies mind their revenue streams during the market downturn.
"The entire oil and natural gas industry, particularly the offshore segment, is understandably being very cautious about spending money," Randall Luthi, president of the National Ocean Industries Association, said in a statement.
Most energy companies are spending less on oil and gas exploration because of lower crude oil prices. Offshore oil services company Hercules Offshore filed for Chapter 11 bankruptcy last week in an effort to ensure durability during the oil market depression. The U.S. Bureau of Ocean Energy Management's lease was the eighth under a five-year program for development of the Outer Continental Shelf. The first seven leases brought in a combined $2.9 billion in bid revenues and, with 75 percent of the undiscovered technically recoverable oil and gas reserves, BOEM was unfazed by the low lease interest.
"The Gulf remains a critical component of our nation's energy portfolio and holds important energy resources that spur economic opportunities for Gulf producing states, creating jobs and home-grown energy and reducing our dependence on foreign oil," BOEM Director Abigail Ross Hopper said in a statement. "While this sale reflects today's market conditions and industry's current development strategy, it underscores a steady, continued interest in developing deep water federal offshore oil and gas resources."