Offshore oil firms eager for Uncle Sam's big auction
| New Orleans
May 25 is a date circled in red on the calendars of many in the offshore oil community here. That's the date when the Department of the Interior's Minerals Management Service puts the outer continental shelf of the whole central Gulf of Mexico up for auction.
Exploration and production companies will bid for federal leases to drill for oil and gas in whatever part of this area appeals to them.
This is a change from the earlier procedure, in which industry was asked to ''nominate'' 5,000-acre tracts. The government would then study these nominations geologically and environmentally and eventually decide whether to ''second'' them or not.
The result of the old system was a lot of duplicative research, according to Interior spokesman Barney Congdon at his office in Metairie, just outside New Orleans.
And for the energy companies, the old system meant doing a lot of piecemeal geological work, says Jim Current, production manager for the Offshore East Division of Shell Offshore Inc.
''It's a chance of a lifetime,'' he exults, and ''more like the way other countries do it.'' The United States has had only a very small proportion of its offshore tracts leased for energy development in comparison with other countries.
Mr. Congdon refers to the new method as a ''streamlining'' of procedures that will save taxpayers' money. ''And we've been getting positive vibes from the oil companies,'' he says.
Hundreds of people will gather in the Louisiana Superdome as the sealed bids are opened in a ''secure area'' and then read aloud to the waiting crowd. Since the energy companies will all have done their geological homework, they will tend to be interested in much the same territories. High bidders will thus win the opportunity to buy the leases they want, Mr. Congdon says, although they won't actually get to buy them until officials study the tracts environmentally as well as geologically, to ensure that the bid is for as much as the tract is worth.
Up for auction will be nearly 40 million offshore acres of outer continental shelf, under waters as shallow as 12 feet and as deep as 9,000 feet. Tracts will be as close in as three miles from shore (the point at which federal jurisdiction begins) and as far out as 220 miles.
This central Gulf section runs to the west as far as a southward extension of the Texas-Louisiana state line, and east as far as a line running south from Mobile, Ala. The Texas and eastern Gulf coasts will be up for mega-auction later this year, as will other major chunks of the Atlantic coast and areas around Alaska.
It's activity like this that makes people here feel that for all its maturity as an oil and gas province - and despite the current downturn in oil prices, Louisiana still has a high-energy future. Some 60 percent of the state's total oil and gas reserves are thought to lie offshore.
Louisiana is where the offshore industry all began, with the first well out of site of land brought in on Nov. 14, 1947.
Experience has brought expertise, making Louisiana a major center for offshore technology. Louisianans have helped develop offshore fields in the North Sea and elsewhere around the globe. And technological lessons learned in trickier waters abroad have been brought back to the Gulf to make possible the ''underwater skyscrapers'' being built further and further from shore.
The offshore support industries are a world unto themselves - the catering services, for example, that feed platform crews on duty out in the Gulf for, typically, seven days at a time. Then there are the helicopters. Petroleum Helicopters Inc. of New Orleans and Lafayette claims to have, with its 400-plus aircraft, the largest commercial chopper fleet in the world.
PHI's log of flight hours is a quick index to the state of the offshore industry in general. From a normal 35,000 hours monthly, the firm is down to around 31,000, according to Frank Lee, vice-president and general manager. For established platforms, served by PHI's smaller craft, it's pretty much production as usual. But exploration and drilling are off, so some of PHI's larger craft are idled.
Back at Shell Offshore, Mr. Current says Shell has 19 drilling rigs at work in the Gulf, down slightly from the number working a year ago. ''But the drop has been arrested,'' he says. The energy glut doesn't mean drilling has stopped; it's just been concentrated on better-quality prospects. Besides, in offshore drilling, there is a long lead time before a well can be brought into production , so offshore producers are looking further beyond the glut than most. ''If we were to start drilling today,'' Mr. Current says, ''it would be 1986 before the gas could be sold.''