E&P companies proved their interest in the ultradeep Gulf of Mexico and deep shelf at the most recent Central Gulf lease sale. Sale 190 attracted more than $368 million in high bids on 557 tracts. The total number of bids-829-was the highest received in a Central Gulf sale in the past six years. Compared with last year's Central Gulf sale, ultradeepwater tracts were quite popular. A record 91 blocks in water depths greater than 1,600 meters received bids, compared with 63 blocks last year. The average high bid for one of these ultradeep tracts rose also-about 28.8%. The highest bid for an ultradeep block was from 1EnCana Corp. ?, - $8.2 million for Walker Ridge 969. More conventional deepwater tracts-those in at least 800 meters of water-also saw higher bids-the average at Sale 190 was 28% more than last year. However, two blocks stole the show-Green Canyon 468 and 512. They received the highest bids offered for individual tracts in many years, says Gary Nuschler of 1Sanders Morris Harris íD . These adjacent blocks are three blocks away from 1Murphy Oil ¥U 's Front Runner discovery and 1ChevronTexaco Jz 's Tahiti discovery. Block 468 was bid on by 1Amerada Hess è» for $35.3 million, and Block 512 was bid on by 1Nexen Æ´ for $31.1 million. If those two blocks were subtracted from the mix, the average bid per deepwater tract actually declined 27%, Nuschler notes. Interestingly, ChevronTexaco tried to buy the two blocks last year for $7.8 million and $3.8 million, but the bids were rejected by the Minerals Management Service for being too low, he adds. On the shelf-in up to 200 meters of water-the number of blocks receiving bids declined 9.1% from last year, but there were 10.5% fewer blocks available than in the year-ago sale. Looking at the shelf on an average-bid basis, the average high bid was up 9.1%. "[The increase] in the bid per tract implies that operator interest in the deep shelf is increasing," Nuschler says. The highest bid for a shelf block was from 1Hunt Oil Co. ^P -for South Timbalier 155 it bid $5.3 million. David Trice, president and chief executive of 1Newfield Exploration ... , noted the day after the sale, in a presentation to Houston energy bankers, that major oil companies had shown great interest in shelf blocks. "When's the last time you saw that?" Newfield is "relatively close" to bringing together a partnership to drill a $60-million well in its Treasure Island area on the shelf. Targeting Lower Miocene sands at a depth of about 28,000 feet, the well is extremely high-risk. "We're proud to be on the leading edge of this trend," Trice said. The deepest-ever well drilled on the shelf was 1Shell e<= 's Shark well, drilled to 26,000 feet. It was noncommercial. However, Trice said he is encouraged by El Paso's success at JB Mountain, a deep shelf well that found good pay from the Lower Miocene trend. (For more on JB Mountain, see "Momentum" in this issue.)
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