MMS Offers First Western Gap Leases, Incentives

Bidding is expected to be high for two Minerals Management Service Gulf of Mexico sales this summer, one that focuses on a region of the Central Gulf that has been a no man's land for exploration and production, and another in the Western Gulf. Part of the attraction will be the added incentives for drillers, which MMS is using to increase domestic oil and gas production.

In the Central Gulf Sale 178, Part 2, leases will be found in the region known as the Western Gap, thought to contain huge amounts of untapped oil and gas. The area, beyond the 200-mile range between the United States and Mexico, opened under a treaty completed just last year (see NGI, June 12, 2000).

The proposed sale 178, scheduled August 22 in New Orleans, will offer for lease blocks that are beyond the U.S. Exclusive Economic Zone (EEZ) in the northern portion of the Western Gap. It encompasses 53 whole or partial blocks in the Central Gulf Planning Area that were not offered in the Central Gulf Sale 178, Part 1, held in March (see NGI, April 2). The blocks cover more than 294,000 acres, and offer a primary lease term of 10 years.

MMS has another sale in the works for the same day, with blocks for lease in the Western Gulf under Lease Sale 180. It includes 258 blocks in the Western Gap region. Both sales will offer several incentives, including royalty relief, for oil and gas exploration and production.

"These are the same initiatives instituted for Central Gulf Lease Sale 178, Part 1, held in March," said Tom Kitsos, MMS acting director. He said that the proposed lease sales "will provide incentives for high cost/high risk exploration for natural gas targets deep below the ocean floor, in addition to providing an appropriate mix of incentives to ensure that exploration and development continues in ultra-deep waters with the same momentum as in the past."

Included in the Gulf sales are incentives to drill for deep gas deposits located in the shallow-water shelf area of the Gulf by providing for royalty suspension for the first 20 Bcf of production from a well drilled below 15,000 feet subsea.

Proposed Sale 180 encompasses 4,106 unleased blocks, about 22.39 million acres, offshore Texas and in deeper waters offshore Louisiana. The blocks are located nine to 250 miles offshore in depths ranging from 8-3,000 meters. Estimates of undiscovered economically recoverable hydrocarbons expected to be found as a result of the sale are 120-90 MM bbl and 0.57-1.93 Tcf. There are 1,951 blocks in depths of 800 meters of more.

To learn more about the proposed lease sales, visit the MMS web site at or contact the Gulf of Mexico Regional Office, Public Information Unit, 1201 Elmwood Park Blvd., New Orleans, LA 70123, (504) 736-2591 or (800) 200-GULF.

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