One initiative is an incentive that applies to shallow-water deep gas production. In this case, a lease in less than 200 meters of water that begins production from a new deep gas reservoir (15,000 feet or greater subsea) within 5 years from lease issuance, i.e., not extended by lease suspension, will receive a royalty suspension on the first 20 billion cubic feet of its deep gas production.
Deepwater royalty relief will be applied to tracts in water depths 400 meters or deeper. The specific terms for royalty relief will be granted to individual leases, not fields as in the Deep Water Royalty Relief Act of 1995 (DWRRA). The royalty "suspension volumes" are 5 million barrels of oil equivalent (BOE) in water depths of 400 meters to 799 meters; 9 million BOE in water depths of 800 meters to 1,599 meters; and 12 million BOE in water depths of 1,600 meters and deeper. Under the terms of this leasing system, lessees are allowed to produce these volumes of oil and gas before any royalty obligations are due the Federal Government.
MMS adopted several new provisions, in stipulation 5, in the Final Notice of Sale that are aimed at protected species such as sea turtles and marine mammals. These were required after consultation with the Fish and Wildlife Service and NOAA Fisheries. These require:
Sale 184 encompasses 4,102 unleased blocks, about 22.3 million acres, in the Western GOM Outer Continental Shelf Planning Area offshore Texas and in deeper waters offshore Louisiana. The blocks are located from 9 to 250 miles offshore in water depths ranging from 8 meters to more than 3,000 meters. Estimates of undiscovered economically recoverable hydrocarbons expected to be discovered and produced as a result of this sale range from 10 to 90 million barrels of oil and 0.57 to 1.93 trillion cubic feet of natural gas. There are 1,873 blocks in water depths of 800 meters or more.
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