NGI The Weekly Gas Market Report
After a long wait and much anticipation, only a month remains until oil and natural gas Lease Sales 206 and 224 in the Gulf of Mexico take place, according to final notices printed in the Federal Register last Wednesday by the Minerals Management Service (MMS).
More than 29 million acres offshore Louisiana, Mississippi, Alabama and Florida, including some blocks in the Eastern Gulf of Mexico Planning Area that are available for the first time in 20 years, will be up for lease on March 19 in the St. Charles Club Room at the Louisiana Superdome in downtown New Orleans (see NGI, Nov. 5, 2007). The Central Gulf of Mexico (CGOM) Lease Sale 206 and Eastern Gulf of Mexico (EGOM) Lease Sale 224 will be held consecutively.
Lease Sale 206 encompasses approximately 5,000 unleased blocks covering more than 28.5 million acres in the CGOM Planning Area offshore Louisiana, Mississippi and Alabama. The acreage is located from three to 230 miles offshore in water depths of about 10 feet to more than 11,200 feet.
Lease Sale 224, mandated by the Gulf of Mexico Energy Security Act of 2006, encompasses 118 whole or partial unleased blocks covering approximately 547,000 acres in the EGOM Planning Area. The acreage is located 125 statute miles or farther offshore, south of the Florida Panhandle and west of the Military Mission Line in water depths ranging from 2,657 feet to 10,213 feet.
Sale 224 is the only sale scheduled in the current Five-Year Oil and Gas Leasing Program to include acreage in the Eastern GOM. The acreage included in this Eastern GOM Lease Sale 224 was last available for lease in 1988.
“Sale 224 is the first sale where the revenue sharing provisions of the Gulf of Mexico Energy Security Act of 2006 will start immediately. The states of Alabama, Mississippi, Louisiana and Texas will share in revenue from all leases resulting from Sale 224,” noted Randall Luthi, MMS director.
The MMS estimates that the Sale 224 area contains from 100 million to 140 million bbl of oil and 0.16 to 0.34 Tcf of natural gas, and the Sale 206 area contains approximately 0.877 billion to 1.457 billion bbl of oil and 3.653 to 5.892 Tcf of natural gas.
The final notices of sale for sales 206 and 224 printed last Wednesday include an increase in the royalty rate to 18.75% from 16.67% and will include rental rates of $6.25/acre for tracts in waters 200 meters or less and $9.50/acre for tracts in deeper waters.
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