The Minerals Management Service (MMS) released a proposed notice for Central Gulf Lease Sale 198 on Tuesday, estimating potential production from the acreage of 276-654 million bbl of oil and 1.59-3.3 Tcf of gas. The lease sale, which is scheduled for March 15, 2006, will encompass about 4,000 unleased blocks covering 21 million acres in the Central Gulf of Mexico Outer Continental Shelf planning area offshore Louisiana, Mississippi and Alabama. Recently revised special provisions for the sale include the following: Deepwater royalty relief lease terms specified in the Energy Policy Act of 2005; Shallow-water deep-gas royalty relief for leases in water depths of zero to less than 400 meters (relief in the recent Western Gulf sale was in the zero to less than 200 meter range). In addition, this sale will provide an increase in the royalty suspension volumes from 25 BCF to 35 BCF for successful shallow-water wells drilled 20,000 feet or deeper; This will be the first Central Gulf sale with the higher rental rates that were implemented in August 2005; A newly developed stipulation regarding limitations on use of the seabed and water column in Mississippi Canyon Block 118 because of an ongoing federally funded University of Mississippi study of gas hydrates; A new Information to Lessee (ITL) clause that relates to ongoing U.S. Coast Guard reviews of the Gulf Landing LNG project; and an earlier time deadline for Electronic Fund Transfer (EFT) rental payments associated with this sale.

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