MMS Sets Tentative Eastern GOM Lease Sale

The Minerals Management Service has scheduled its only Eastern Gulf of Mexico sale in its current five-year leasing plan --- and the first proposed sale in the eastern section of the Gulf in more than 12 years. Proposed lease sale 181, scheduled December 2001, would include 1,033 blocks covering 5,949 million acres --- about 8% of the total area in the Eastern Gulf Planning Area.

Participation is expected to be high for a couple of reasons. MMS may not hold another lease sale for that particular area until 2012. And then there are the high reserves estimated to be there. MMS estimates the sale area could contain "significant oil and gas resources that are largely unexplored at this point." MMS estimates the resources to be developed could hold as much as 240 MM bbl of oil and 1.8 Tcf of gas. The entire lease sale area could contain up to 370 MM bbl of oil and 3.2 Tcf of gas.

The proposed lease sale area includes 120 blocks in a narrow strip in the western portion of the eastern Gulf, beginning about 15 miles offshore Alabama. Another 913 blocks are in deeper water, nearer to Louisiana than to Florida. "The deeper water area is immediately adjacent to the prolific energy area in the Central Gulf of Mexico called Mississippi Canyon," said MMS, area that already has yielded large discoveries by several companies, including Shell, BP and Pioneer Natural Resources Co. (see Daily GPI, Oct. 24, Sept. 28, May 4, Feb. 16).

Several companies told MMS they are particularly interested in developing leases near the Mississippi Canyon area, specifically in the DeSoto Canyon region and the Destin Dome areas, which fall along the boundary between the central and eastern Gulf. There, water depths are 108 to 10,980 feet.

Because of Florida's objection to drilling within 100 miles of its coastline, none of the blocks are within that restricted region. However, the region falls close to the disputed Destin Dome region. There, nine leases remain under development by Chevron, Conoco and Murphy Exploration & Production. The field contains potential reserves of up to 2.6 Tcf, but years after the nine leases were sold and drilled, Florida moved to ban all offshore drilling within 100 miles of its coastline.

The three exploration partners filed a lawsuit over the Destin Dome leases in July, claiming the federal government has tied their development plans into a "proverbial Gordian Knot" because the Commerce Department and the Environmental Protection Agency has frozen the review process and prevented projects from ever being approved. Each agency reviewing the project has said it cannot move forward without a favorable decision by the other (see Daily GPI, July 25).

Because of the controversy surrounding Florida-related development, MMS will hold two of its four public hearings next month in Florida on the Draft Environmental Impact Statement concerning Sale 181. The hearings are set for Jan. 23 in New Orleans, Mobile AL, Pensacola, FL and Tallahassee, FL. Following the hearings, a final EIS would be issued in June, and the notice of sale would be posted in July 2001. A final notice for the sale would then be released in October 2001, with the sale three months later. All of the dates could change depending on the outcome of the hearings. To review the Draft EIS, or for information on the public hearings, contact MMS's Public Information Office in New Orleans at (800) 200-GULF.

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