Largest US auction in history disappoints

Only about 1% of the acreage offered at an auction that was to have been the largest in US history attracted interest on Wednesday, international media reported.

About 313,000 square kilometres offshore Texas, Louisiana, Mississippi, Alabama and Florida were offered in Lease Sale 250, attracting more than 150 bids from big oil companies, the New York Times reported. However, yields for the government, which claimed that the round had been a success, stood at a meager USD 125 million, the report added.

“Lease bids are driven by the market rather than rhetoric,” Michael Bromwich, a former director of the Bureau of Ocean Energy Management during the administration of President Barack Obama, told the Washington Post. “[T]he tepid level of interest is the product of low oil prices, the choices that companies have to make with their capital expenditures given the competing business opportunities, which now include shale, when that was not the case a decade ago, and the fact that companies have become more focused and less profligate about their offshore investments.”