MMS Issues Notice for Western GOM Lease Sale 184

The U.S. Department of the Interior's Minerals Management Service is making available the Proposed Notice of Sale for Western Gulf of Mexico Sale 184. Several initiatives to increase domestic natural gas and oil production to meet the Nation's energy needs are proposed for the sale, scheduled for August 21, 2002, in New Orleans. The initiatives are part of the issuance of a proposed notice of sale for Sale 184 in the Federal Regsiter.

Included in the proposed notice is an incentive to drill for deep gas deposits located in the shallow-water shelf area of the Gulf of Mexico by providing for royalty suspension for the first 20 billion cubic feet (BCF) of production from a well drilled below 15,000 feet sea level.

Deepwater royalty relief will be applied to tracts in water depths greater than 400 meters. The specific terms for royalty relief will be granted to individual leases, not fields as in the Deep Water Royalty Relief Act, and will be designated at the time of the final notice of sale. In the case of proposed Sale 184, the royalty "suspension volumes" range from 5 million barrels of oil equivalent (BOE) in water depths of 400 – 799 meters, to nine million barrels of oil equivalent (BOE) in water depths of 800 – 1599 meters, and to 12 million barrels of relief in depths greater than 1,600 meters. 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.

Proposed Sale 184 encompasses 4,085 unleased blocks, about 22.2 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 proposal range from 10 to 90 million barrels of oil and 0.57 to 1.93 trillion cubic feet of natural gas. There are 1,875 blocks in water depths of 800 meters or more.