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The Cost of OCS Bid Rejection

Abstract:
The U.S. Interior Department periodically offers Outer Continental Shelf (OCS) tracts for lease at seated bid auction. The bid variable typically is the bonus, a sum paid by the lessee at commencement of the lease. A tract is awarded only to the high bidder. However, the seller often deems even the high bid insufficient, rejecting it and withholding the tract for possible laterauction.

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Energy Specializations: Petroleum – Exploration and Production

JEL Codes:
D24 - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

Keywords: Oil exploration, Outer continental shelf, US, Bid rejection, Oil leases

DOI: 10.5547/ISSN0195-6574-EJ-Vol7-No1-6


Published in Volume 7, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.