Companies bid millions to tap Western Gulf

The results of the first lease sale since offshore drilling emerged as a key campaign issue after gasoline prices topped $4 a gallon only muddied the waters as to how much politics can really influence oil production, and by extension, energy prices.

While firms bid $487.3 million to win the rights to drill 319 tracts of the Gulf, most in deep water, 90 percent of the area put up for sale Wednesday did not receive a single bite. Most of the leases purchased came with 10-year terms, unlikely to influence prices now.

The highest bid of the 47 received Wednesday--$61 million--came from StatoilHydro USA, a subsidiary of the Norwegian oil giant. Exxon Mobil Corp., which has been relatively inactive in the Gulf in recent years, posted the most winning bids. The company plans to spend $127.3 million to explore 130 tracts.

Chevron USA Inc. was the second biggest spender Wednesday--paying $127.2 for the rights to drill in 20 tracts--a day after Republican presidential candidate John McCain visited one of its offshore platforms.

"This is where we have found success and we are the clear leader," said Chevron spokesman Mickey Driver. "We came here to win and we are leaving winners."

The Bush administration used the occasion to push for more domestic energy production, and to point out that attempts to force companies to drill on federal lands already leased don't work.

"Much more needs to be done to create the access necessary for the oil industry to do what it does best and develop this country's resources to secure our energy security," said Interior Secretary Dirk Kempthorne, who unsealed the first bid at a downtown New Orleans hotel Wednesday morning.

In March, the Interior Department held the first-ever lease sale for an area of the eastern Gulf Congress opened up for drilling in 2006. The bidding five months ago was tame, with companies spending $64.7 million to drill 36 tracts. Officials said part of the problem was the uncertainty surrounding how much oil and gas is actually there. Without that information, companies are reluctant to invest millions exploring a region.

The same problem exists for the areas Congress may consider opening when it returns in September.