MMS Issues Final Notice of Western GOM Lease Sale 184

The MMS has published the Final Notice of Sale for Western Gulf of Mexico (GOM) Sale 184. Several initiatives to increase domestic natural gas and oil production to meet the Nation’s energy needs are included in Sale 184, scheduled for August 21, 2002, at 9 a.m. at the Hyatt Regency Hotel Conference Center, Cabildo Room, 500 Poydras Plaza, New Orleans, Louisiana.

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:

  • that seismic surveys cease operations when a sperm whale is detected in a 180-dB impact zone and that ramp-up procedures be used;
  • that operators report all sightings and locations of dead and injured endangered and threatened species (sea turtles and whales);
  • that oil spill contingency planning include identifying important habitats used by listed species, and require the strategic placement of spill cleanup equipment; and
  • that all aircraft used in operations avoid low flying near brown pelican or whooping crane areas.

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.