Recently in Gulf of Mexico Category

One of the most underreported E&P stories of recent months is the apparent discovery at the Blackbeard West well in the geologically deep Gulf of Mexico Continental Shelf, made by a tiny operator which has probed depths its mammoth predecessor failed to attain.

Central Gulf of Mexico Lease Sale 208 in New Orleans this week was dealt an undeserved bad rap this week from Wall Street, which seemed disappointed in its mere $703 million in total high bids compared to the staggering all-time record $3.67 billion in last year's Central Sale.

Often overlooked in assessments of recovery from last year's Gulf of Mexico hurricanes, the largest chunk of spending is yet to come in the abandonment arena with an estimated $1.8 billion to $6 billion likely required to close down destroyed fields. And that estimate comes atop the estimated $15 billion worth of abandonment work still under way from storms in 2004 and 2005.

It is the middle of a long weekend indeed for US oil futures traders -- and reporters -- as the first major hurricane to threaten US oilfields in three years moves slowly and menacingly towards the coast of Louisiana. Traders were cursing the weather as Hurricane Gustav edged past Jamaica and Cuba as the weekend began -- but the storm is creating more volatility for their holiday planning than oil prices.

The underwhelming price response shows what a different world the markets are reflecting in 2008, compared to 2005 when Hurricanes Katrina and Rita wreaked absolute havoc on global oil markets, sending prices soaring by 10% or more as they tore through the Gulf of Mexico.

No one can accuse the oil industry of a failure to recycle.

The proof emerged in Wednesday's Western Gulf of Mexico lease sale where nine of the 10 highest priced leases came on blocks recycled from 10 years ago, when they were leased by companies who could not develop them.

E&P companies that placed eight-figure bids for properties in Central Gulf of Mexico Lease Sale 206 weren't the auction's only beneficiaries.

The record-breaking sale March 19, which captured a breathtaking $3.67 billion in total high bids -- the largest amount in the 54-year history of offshore US property leasing -- also shone new luster on the Gulf as a vital and prospective place to explore for oil and gas. And it showed just how far oil companies are willing to go to pick up choice deepwater acreage.