The oil and gas lease sale conducted last week by the state Mineral Board brought in only $29,000 and is the lowest monthly sale Louisiana has experienced in at least a generation. Energy leases have been under-performing for most of the calendar year, beginning with a record 13-year low in January and the downward trend seemed to improve only slightly during the spring and summer.
But to put this month’s $29,000 take into perspective, just consider that the five-year September average from 2003 to 2007 was more than $2.8 million per sale. The September 2008 sale was not included in the calculation because it was canceled due to Hurricane Gustav.
Surprisingly enough, this year’s September sale was small by design, according to Patrick Courreges, spokesperson for the Department of Natural Resources, who said the Mineral Board chose not to nominate as many tracts as it usually does. The reasons for slowing down the month sale are varied, especially from the side of industry: Oil reserves are already brimming; investment capital and credit are harder to come by; and energy prices are far from favorable.
But Courreges adds that the lull chiefly comes from all the recent action in north Louisiana’s Haynesville Shale area, where millions have been invested to get a piece of what’s expected to become the nation’s top producing natural gas field within the next six years. “What you’re seeing now is folks are spending their money on getting their sites ready and are drilling, instead of buying more leases,” Courreges says.
The Haynesville Shale, if anything, is keeping the state’s leasing program afloat. Last month’s energy sale saw 20 Haynesville Shale area leases averaging more than $6,500 an acre — up from nearly $4,800 an acre in July. Moreover, the year-to-date collections are up compared to previous years, hovering around $10.5 million. To find a comparable year-to-date figure, you’d have to turn back the clock to 2005 when collections were at nearly $12 million in September. State government follows a fiscal year calendar, meaning from July to June.
In all, three leases covering about 47 acres were awarded at this month’s sale, out of five nominated tracts covering about 1,340 acres. The Mineral Board sold leases in four parishes: Acadia, Assumption, St. Martin and Terrebonne. For a more detailed breakdown, go to here