UPDATE 2-Chevron bid highest in Gulf of Mexico sale; BP sits out

Wed Nov 28, 2012 4:26pm EST

By Kristen Hays

HOUSTON Nov 28 (Reuters) - Chevron Corp submitted the highest bid on Wednesday in an auction for drilling rights in the western Gulf of Mexico, while BP Plc decided not to participate even before the U.S. government temporarily banned it from new federal contracts.

Chevron's highest bid of $17.2 million was for a tract about 140 miles (225.3 km) south of Galveston, Texas.

Tommy Beaudreau, director of the U.S. Bureau of Ocean Energy Management, which approves leases for oil and gas producers to operate in the Gulf, said BP was not among the 13 companies that submitted $157.7 million in bids.

If BP had joined in, BOEM would not have awarded it any leases, he said, citing the U.S. Environmental Protection Agency's ban over BP's "lack of business integrity" in the Deepwater Horizon explosion and oil spill in 2010.

"If BP had bid in this lease sale, which they didn't, but if they had, we wouldn't have awarded the leases in light of the suspension," Beaudreau said after the sale.

BP spokesman Brett Clanton said Wednesday that BP decided not to participate in the lease sale "prior to and independent of" the EPA's ban announcement.

Beaudreau noted the ban does not affect BP's existing leases and permits. BP is the second-largest oil producer in the Gulf behind Royal Dutch Shell, according to government rankings.

Chevron also submitted the top sum of high bids at $56 million, followed by ConocoPhillips at $51.7 million, BHP Billiton at $14.5 million and Exxon Mobil Corp at $5.9 million.

Simmons & Company International said in a note to investors on Wednesday that the 116 tracts that received bids were 3 percent of those offered. The last western Gulf lease sale in December 2011 garnered bids on 5 percent of tracts offered.

Simmons also noted that 20 companies submitted bids in the last western Gulf sale, seven more than on Wednesday.

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