As the New York Times reported on March 21, the Trump administration held an auction offering a record 77 million acres in the Gulf of Mexico for drilling. The Administration called the sale a success, since companies like Royal Dutch Shell, BP, Chevron, and Total placed over 150 bids yielding $125 million for the government. The problem is, that is actually a fairly terrible outcome, as companies bid on only 1% of the available acreage.
Meanwhile, back onshore in Utah, the Administration also held an auction for 51,000 acres in southeastern Utah near the Bears Ears National Monument. Every parcel received a bid, earning the government $1.56 million. Obviously, it is a much smaller lease sale, but it is hard to overlook the onshore fields getting snapped up while the desire for offshore fields is tepid.
It is no mystery what is going on. Drilling in shale formations beats offshore production in every way. Offshore production takes enormous investments and has high exploration risks. With shale, companies do not have to worry about drilling a dry hole. Plus each shale well has a relatively low cost, so a company is usually not betting it all on one well.
Offshore exploration can also take years to develop into production. Shale wells can be drilled and delivering oil and gas to the market within weeks. Offshore also requires crews to work around the clock in the middle of the ocean, while onshore workers can drive on home at the end of their shift.
One of the best places for onshore production is the Marcellus shale formation in Pennsylvania, Ohio, and West Virginia. These states boast a rapidly-expanding pipeline system and experienced crews. If you want to secure acreage in the area just reach out to Cimmaron Land at (412) 212-7517.