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Recent U.S. offshore oil and gas lease bidding: A progress report

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  • Haile, Philip
  • Hendricks, Kenneth
  • Porter, Robert

Abstract

We describe an ongoing research project, in which we examine recent trends in bidding for offshore oil and gas leases, and the exploration and development of leases after they are sold. We review empirical findings regarding bidder participation and bidding for the period 1954 through 1982. In 1983, the MMS adopted Area Wide Leasing (AWL), which dramatically changed the bidding environment. We provide an initial analysis of the post-1982 data, documenting a number of significant changes in behavior and outcomes. Bidding has been much less aggressive recently in comparison with the early years of the leasing program, in terms of both the number of bids submitted and the level of the submitted bids. This descriptive evidence leads to a number of questions, and we discuss a number of changes in the bidding environment since 1982, which may offer partial explanations of the observed changes.

Suggested Citation

  • Haile, Philip & Hendricks, Kenneth & Porter, Robert, 2010. "Recent U.S. offshore oil and gas lease bidding: A progress report," International Journal of Industrial Organization, Elsevier, vol. 28(4), pages 390-396, July.
    • Handle: RePEc:eee:indorg:v:28:y:2010:i:4:p:390-396
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    References listed on IDEAS

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    1. Hendricks, Kenneth & Porter, Robert H & Wilson, Charles A, 1994. "Auctions for Oil and Gas Leases with an Informed Bidder and a Random Reservation Price," Econometrica, Econometric Society, vol. 62(6), pages 1415-1444, November.
    2. Philip A. Haile & Han Hong & Matthew Shum, 2003. "Nonparametric Tests for Common Values in First-Price Sealed-Bid Auctions," Cowles Foundation Discussion Papers 1445, Cowles Foundation for Research in Economics, Yale University.
    3. Ken Hendricks & Robert Porter & Guofu Tan, 2008. "Bidding rings and the winner's curse," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 1018-1041, December.
    4. Hendricks, Kenneth & Porter, Robert H, 1992. "Joint Bidding in Federal OCS Auctions," American Economic Review, American Economic Association, vol. 82(2), pages 506-511, May.
    5. Kenneth Hendricks & Joris Pinkse & Robert H. Porter, 2003. "Empirical Implications of Equilibrium Bidding in First-Price, Symmetric, Common Value Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(1), pages 115-145.
    6. Porter, Robert H, 1995. "The Role of Information in U.S. Offshore Oil and Gas Lease Auctions," Econometrica, Econometric Society, vol. 63(1), pages 1-27, January.
    7. Hendricks, Ken & Porter, Robert H., 2007. "An Empirical Perspective on Auctions," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 32, pages 2073-2143, Elsevier.
    8. Athey, Susan & Haile, Philip A., 2007. "Nonparametric Approaches to Auctions," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 60, Elsevier.
    9. Hendricks, Kenneth & Porter, Robert H, 1996. "The Timing and Incidence of Exploratory Drilling on Offshore Wildcat Tracts," American Economic Review, American Economic Association, vol. 86(3), pages 388-407, June.
    10. Hendricks, Kenneth & Porter, Robert H, 1988. "An Empirical Study of an Auction with Asymmetric Information," American Economic Review, American Economic Association, vol. 78(5), pages 865-883, December.
    11. C. E. Moody, Jr. & W. J. Kruvant, 1990. "OCS Leasing Policy and Lease Prices," Land Economics, University of Wisconsin Press, vol. 66(1), pages 30-39.
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