MMS Issues Final Notice of Eastern Gulf Lease Sale 197

Gulf of Mexico Lease Sale 197
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The Minerals Management Service announced the availability of the Final Notice of Lease Sale 197, an offshore oil and gas lease sale in the Eastern Gulf of Mexico, scheduled for March 16, 2005. This lease sale is the third Eastern GOM Outer Continental Shelf lease offering in the last five years. The configuration is the same as MMS Eastern GOM Lease Sales 181 and 189, held in December 2001 and December 2003, respectively.

The lease sale area encompasses the unleased blocks in an area of the Eastern GOM OCS Planning Area. The area is directly south of Alabama. These 124 unleased blocks cover about 714,240 acres and are located from 100 to 196 miles offshore in water depths of 1,600 to more than 3,425 meters. Estimates of undiscovered economically recoverable hydrocarbons in this proposal range from 65 to 85 million barrels of oil and 0.265 to 0.34 trillion cubic feet of natural gas.

This final notice, published today in the Federal Register, includes the continuation of recently adopted price thresholds, as follows:

Price thresholds when deep water royalty suspension would end are set at $39.00 per barrel for oil and $6.50 per million British Thermal units (MMBTU) for gas, expressed in 2004 dollars.

In addition, the following provision has been recently revised for this final notice of sale:

In accordance with regulations at 43 CFR, part 42, subpart C, the lessee shall comply with the U.S. Department of the Interior's nonprocurement debarment and suspension requirements and agrees to communicate this requirement to comply with these regulations to persons with whom the lessee does business as it relates to this lease by including this term as a condition to enter into their contracts and other transactions. This agreement will be evidenced by language prepared by MMS through an Addendum included in each lease resulting from this lease sale.

As a further incentive towards meeting our Nation's energy needs and increasing domestic natural gas and oil production, a royalty suspension of 12 million barrels of oil equivalent for a lease in water depths of 1,600 meters or deeper has been continued for this sale.

Statistical Information (Lease Sale 197):

Size: 124 unleased blocks; 714,240 acres

Initial Period: 10 years

Minimum Bonus Bid Amount: $37.50 per acre or fraction thereof

Rental/Minimum Royalty Rates: $7.50 per acre or fraction thereof

Royalty Rates: 12-1/2%

Royalty Suspension Area: A royalty suspension of 12 million barrels of oil equivalent will apply to all leases in this sale.
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