MMS Proposes New Incentive for Ultra Deep Drilling
The U. S. Department of the Interior's Minerals Management Service has issued a proposed rule that will allow Suspensions of Operations (SOO) to oil and gas lessees or operators who plan to drill ultra-deep wells. MMS expects the new rule will lead to increased drilling of ultra-deep wells and increased domestic production.
The proposed rule would encourage drilling of ultra-deep wells to depths of at least 25,000 feet true vertical depth sub-surface by granting a SOO in certain situations.
Generally, when a lease reaches the end of its primary term, the lessee must be producing or conducting other leaseholding operations to extend the lease beyond its primary term. However, due to the added complexity and costs associated with planning and drilling an ultra-deep well, MMS recognizes that more time may be needed for exploration and development. In such cases, the lease term could be extended through a SOO.
The proposed rule would grant SOO, under the following circumstances:
Although some leases with 10 year primary terms are issued in deep water, they are not covered by the proposed rule, because MMS believes that 10 years is sufficient to explore and develop such deep prospects.
The comment period for the proposed rule closes on March 16, 2005. Comments may be submitted to MMS by the following ways:
Public Connect online commenting system at: https://ocsconnect.mms.gov/pcs-public/
Postal mail: Department of the Interior
Minerals Management Service
Attention: Rules Processing Team (RPT)
381 Elden St.
Herndon, VA 20170-4817
Specific details and instructions are available in the proposed rule on the Federal Register website.