“Vast resources” of oil and natural gas may underlie sheets of salt on the outer continental shelf (OCS), the Minerals Management Service (MMS) said in announcing approval of a final rule providing an extension of time for companies who are exploring to locate these resources.
The rule published in the Federal Register Tuesday, July 2, allows an extension of five or eight-year OCS leases for additional time periods so companies can complete geophysical evaluation of deep prospects, located under salt sheets. The extensions will be granted on a case-by-case basis for the amount of time needed by the companies to complete the analysis. Previously, companies could apply for an extension of time only if they had already drilled one well. The new rule will include instances where no wells have been drilled because of the extensive requirements of subsalt analysis.
“Through this incentive, MMS supports the president’s National Energy Policy by providing additional flexibility to industry that will, ultimately, allow the development of oil and gas resources, thereby contributing to national domestic energy security,” said MMS Director Johnnie Burton.
Gas exploration under salt sheets can be expensive and time consuming because the salt sheets interfere with analysis of the geophysical data. The extension provides additional time to leaseholders so that they can complete analysis of the complex geophysical data in areas under salt sheets, before having to choose a location to drill a well.
MMS estimates that six to 16 Tcf may lie beneath the salt sheets and could yield 200 to 500 Bcf of gas production between 2008 and 2010.
MMS will require the lessee to have acquired and interpreted geophysical information (i.e., full 3-D depth migration beneath the salt sheet and over the entire lease area) before the end of the third lease year. Lessees who apply for a suspension will be required to specify the activities leading to the drilling of a subsalt well. If the suspension is granted, it will be for a length of time to cover the drilling. Lessees may apply for additional time if they encounter additional complications.
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