Government to Conduct Sale of Gulf Petroleum Leases

A winter that was a nightmare for natural gas customers will probably fuel a larger portion of this week’s sale of offshore petroleum leases in the central Gulf of Mexico. Although a royalty relief program that set off deep-water drilling in the Gulf expired last year, the federal government is providing royalty breaks for drillers who go a bit deeper, even with existing wells, to bring up natural gas. “Natural gas is what is in demand,” said Barney Congdon, a spokesman for the U.S. Minerals Management Service, which conducts the sale. “The crisis situations seem to be with the brownouts in California and the gas shortage hurting agriculture and industry.” Natural gas prices are around $5.50 per thousand cubic feet after peaking at about $11 during the winter. Industry analysts say it is unlikely the price will soon, if ever, fall to the $2 range that dominated gas markets during the 1980s and 1990s. The once-a-year central Gulf sale, which covers tracts off the coasts of Louisiana, Alabama and Mississippi, has been a key indicator of petroleum companies’ exploration intentions. The sale will be conducted Wednesday in New Orleans.