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MMS Issues Proposed Notice of Western Gulf Lease Sale 196

The Minerals Management Service (MMS) last Monday announced in the Federal Register the availability of the Proposed Notice of Sale 196, an offshore oil and gas lease sale in the western Gulf of Mexico, scheduled for Aug. 17.

The proposed Sale 196 encompasses 3,754 unleased blocks covering approximately 20.3 million acres in the western Gulf of Mexico Outer Continental Shelf (OCS) planning area offshore Texas and in deeper waters offshore Louisiana. The blocks are located five to 357 kilometers offshore in water depths ranging from eight to 3,100 meters. MMS estimates that the proposed sale could result in the production of 136-262 million barrels of oil and 0.81-1.44 Tcf of natural gas.

MMS said its proposed increase in base rental rates (as well as minimum royalty) would apply to this lease sale. The agency recently requested comments on the proposed increase in annual lease rental costs from $5.00 to $6.25 per acre for blocks in water depths of less than 200 meters and from $7.50 to $9.50 per acre for blocks in water depths of 200 meters or deeper.

The leases would be for five years for blocks in water depths less than 400 meters. This would apply to 1,754 blocks. Leases of eight years would be granted for 358 blocks between 400 and 800 meters deep, and leases of 10 years would cover the 1,642 blocks in waters of 800 meters or deeper.

The minimum bonus bid would be $25.00 per acre for water depths less than 400 meters and $37.50 per acre for water depths 400 meters or deeper. Production royalties of 16.33% ( less than 400 meters) and 12.5% (deeper than 400 meters) would apply.

The MMS said royalty suspension areas include 1,567 blocks in 0 to less than 200 meters; 358 blocks in 400 to less than 800 meters; 903 blocks in 800 to less than 1,600 meters; and 739 blocks in 1,600 meters or deeper.

Regarding Lease Sale 196, the agency said, "Certifications regarding debarment, suspension, and other responsibility matters are no longer required to be filed with the MMS in order to qualify to bid at an OCS lease sale. However, compliance requirements for debarment and suspension (nonprocurement) will be prescribed in an addendum included in each lease resulting from this lease sale."

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