Don't bid farewell to deep shallow waters just yet

— Western Gulf of Mexico Lease Sale 210 was a record of sorts for several reasons. Not only did it rake in the lowest dollar-total of apparent high bids ($115.5 million) on the fewest blocks (162) in a decade, but it was the first sale in at least 13 years where not a single bid was received for tracts in the 200 to 400 meter water depth range.

That water depth, which has no formal name but may be characterized as deep shallow waters, has not been heavily bid in recent years. But it has yielded some notable finds. Shell's Bullwinkle platform, which started up in 1989 at a cost of half a billion dollars, was just over 400 meters deep.

One reason for the lack of oil companies' interest may be rigs. Depths of 200 to 400 meters represents a between-the-cracks range that surpasses the depth capabilities of most jackup rigs but is too shallow for the challenges and dayrates of most modern semisubmersibles. Rigs that fit the 200-to-400-meter range are harder to find these days. Those still around were built in the 1970s. Many that were built to serve that depth range were upgraded years ago to work in deeper waters for higher dayrates.

But the chief reason for the neglect of leases in 200 to 400 meter waters may be simply that companies are finding more oil and gas in deeper waters. In the last decade, the typical deepwater discovery has moved from around 3,000 or 4,000 feet to 6,000 feet or more. As industry unlocks the mystery of plays in deeper waters, the cost of exploring and producing those frontiers comes down and companies favor them during auctions.

In last year's Western Sale 207, just four blocks in the 200-400 meter depth range received bids; in the 2007 sale, just one block. Those were sales during the last industry upcycle when operators had big bucks to plunk down for the deepest of blocks.

But even in the 2006 Western sale, 19 blocks in the 200-to-400-meter depth range received bids, as did 15 blocks in the 2005 Western sale and 23 blocks in the 2004 sale. You'd have to return to the 2003 and 2000 sales to find scanty bidding in that depth range -- 6 such blocks in each of those sales, respectively, and 9 blocks in 1999.

In Sale 210, operators continued to chase deep waters. As the impressive total sums of recent Western and also Central Gulf sales have shown, the most chart-topping bids continue to be aimed at deeper waters. Sale 210's most breaktaking offer, $28 million by BP for a block in northern Keathley Canyon, was in a trend that was heavily chased by majors in not only this year's auction but in 2008.

Is this the end of the outer edge of the Continental Shelf? By no means. Remember when the US Gulf itself was termed the "Dead Sea" in the mid-1990s? And it reemerged stronger than ever later in that decade and in the 2000s as companies waded out into deeper waters and explored new geologic horizons. The same could be said of deep shallow waters. All that's needed is a new play -- and a better economy -- to get the area kicking again.