U.S. government said unfavorable market conditions may be behind lack of interest in lease sale for oil and gas acreage in the Gulf of Mexico. UPI/A.J. Sisco.. | License Photo
NEW ORLEANS, March 24 (UPI) -- A lack of interest in new oil and gas acreage for sale in the U.S. waters of the Gulf of Mexico may be indicative of a weak energy market, the government said.
The U.S. government said there were $156 million in high bids generated for the 128 parcels on the auction block in the Gulf of Mexico.
"The sum of all bids received totaled $179,172,819," the Bureau of Ocean Energy Management said in a statement. "No bids were received in the Eastern planning area [of the Gulf of Mexico]."
Advocacy groups protested the lease sale held in downtown New Orleans, saying it was time for U.S. energy policies to focus more on clean energy alternatives. The government last week removed drilling consideration for the Atlantic Ocean, where some of the first commercial offshore wind farms are slated for development.
BOEM Director Abigail Ross Hopper said some of the lackluster interest in the new acreage may be a reflection of weakness in energy markets.
"The decline in oil prices and low natural gas prices obviously affect industry's short-term investment decisions," she said in a statement.
Crude oil prices are down 25 percent from this time last year and 62 percent below this date in 2014. That's led energy companies to trim spending on exploration and production in an effort to preserve a competitive edge during the market downturn.
Randall Luthi, president of the National Ocean Industries Association, said those companies that did submit bids were making a statement about the resilience of the oil and gas potential in the Gulf of Mexico.
"Even though the Eastern Gulf sale was a non-starter, and the Central Gulf sale saw the lowest industry interest in the history of such sales, the companies that stepped up and submitted bids demonstrated their commitment to staying in U.S. waters and producing home grown energy, despite a tough operating environment," he said in a statement.
The U.S. Energy Information Administration estimates output from the Gulf of Mexico will account for about 21 percent of total U.S. crude oil production by next year.