August 17, 2017 / 12:49 AM / 2 years ago

U.S. Gulf of Mexico oil, gas lease sale yields $121 million in high bids

FILE PHOTO: Unused oil rigs sit in the Gulf of Mexico near Port Fourchon, Louisiana August 11, 2010. REUTERS/Lee Celano/File Photo

WASHINGTON (Reuters) - A sale of oil and gas leases in U.S. waters in the Gulf of Mexico generated $121.14 million in high bids for 90 tracts covering 508,096 acres (205,619 hectares), Interior Secretary Ryan Zinke said on Wednesday.

The sale, the first by the Trump administration, offered 76 million acres (30 million hectares) and reduced royalty rates for shallow-water leases to encourage drilling at a time of low oil prices.

Twenty-seven companies participated, submitting 99 bids totaling $137 million, the Interior Department said in a statement. The sale was the largest in terms of acreage in the history of the federal offshore program in the Gulf and included parcels off Texas, Louisiana, Mississippi, Alabama and Florida, it said.

The sale was the first of the administration’s 2017-22 National Outer Continental Shelf Oil and Gas Leasing Program.

Zinke signed an order in July to hold more lease sales and speed up approvals of permits to explore for oil and gas, a process he said got bogged down under former President Barack Obama.

Zinke said at that time that offshore royalties returned about $18 billion to taxpayers in 2008, before Obama took office, but had dwindled to $2.6 billion last year.

The Interior Department had said it would lower royalty rates for shallow-water leases in the sale to encourage drilling by oil companies, which have faced lower profits during years of sustained low global crude prices.

Energy companies will pay 12.5 percent royalty rates for leases in less than 200 meters (656 feet) of water, instead of a rate of 18.75 percent that had been proposed earlier.

Reporting by Eric Walsh

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