U.S. Department of the Interior Minerals Management Service Gulf of Mexico OCS Region NEWS RELEASE

MMS Issues Final Notice of Western Gulf Lease Sale 184
Including Initiatives to Increase Domestic Energy Production

The U.S. Department of the Interior’s Minerals Management Service (MMS) has published in today's Federal Register 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.

The Final Notice of Sale will be posted on the MMS Website at http://www.gomr.mms.gov. In addition, copies of the document are available from MMS’s Gulf of Mexico Regional Office, Public Information Unit, 1201 Elmwood Park Boulevard, New Orleans, Louisiana 70123. Telephone (504) 736-2591, toll free 1-800-200-GULF.

Statistical Information Sale 184

Size:	4,102 unleased blocks; 22.3 million acres
Primary Lease Terms:	5 years for blocks in water depths less than 400 meters: 1,855 blocks 8 years for blocks in water depths of 400 meters to 799 meters: 374 blocks 10 years for blocks in water depths of 800 meters or deeper: 1,873 blocks
Minimum Bids:	$25.00 per acre or fraction thereof for water depths less than 800 meters: 2,229 blocks $37.50 per acre or fraction thereof for water depths 800 meters or deeper: 1,873 blocks
Annual Rental Rates:	$5.00 per acre or fraction thereof for water depths less than 200 meters: 1,656 blocks $7.50 per acre or fraction thereof for water depths 200 meters or deeper: 2,446 blocks
Royalty Rates:	16 2/3% royalty rate in water depths less than 400 meters: 1,855 blocks 12 1/2% royalty rate in water depths 400 meters or deeper: 2,247 blocks
Royalty Suspension Areas:	0 to 199 meters: 1,656 blocks 400 meters to 799 meters: 374 blocks 800 meters to 1,599 meters: 1,028 blocks 1,600 meters and deeper: 845 blocks

Royalty Relief

• 1,656 blocks subject to new deep gas incentive (first 20 BCF)
• 199 blocks with no automatic royalty relief
• 374 blocks subject to 5 million BOE relief
• 1,028 blocks subject to 9 million BOE relief
• 845 blocks subject to 12 million BOE relief

MMS is the federal agency in the U.S. Department of the Interior that manages the nation's oil, natural gas and other mineral resources on the outer continental shelf in federal offshore waters. The agency also collects, accounts for and disburses mineral revenues from federal and Indian leases. These revenues totaled nearly $10 billion in 2001 and more than $120 billion since the agency was created in 1982. Annually, nearly $1 billion from those revenues go into the Land and Water Conservation Fund for the acquisition and development of state and federal park and recreation lands. 

-MMS-GOM-