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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. 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.
    3. 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.
    4. 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.
    5. Philip A. Haile & Han Hong & Matthew Shum, 2003. "Nonparametric Tests for Common Values at First-Price Sealed-Bid Auctions," NBER Working Papers 10105, National Bureau of Economic Research, Inc.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    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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    3. Yunmi Kong, 2020. "Not knowing the competition: evidence and implications for auction design," RAND Journal of Economics, RAND Corporation, vol. 51(3), pages 840-867, September.
    4. Bouckaert, Jan & Van Moer, Geert, 2021. "Joint bidding and horizontal subcontracting," International Journal of Industrial Organization, Elsevier, vol. 76(C).
    5. Di Corato, Luca & Dosi, Cesare & Moretto, Michele, 2018. "Multidimensional auctions for long-term procurement contracts with early-exit options: The case of conservation contracts," European Journal of Operational Research, Elsevier, vol. 267(1), pages 368-380.
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    9. Max Resnick, 2023. "Contingent Fees in Order Flow Auctions," Papers 2304.04981, arXiv.org.
    10. Lagziel, David, 2019. "Credit auctions and bid caps," Games and Economic Behavior, Elsevier, vol. 113(C), pages 416-422.

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