The Interior Department’s Minerals Management Service (MMS) has proposed incentives to encourage deep-gas production in shallow waters as part of its upcoming Lease Sale 184 in the western Gulf of Mexico, which has been scheduled tentatively for Aug. 21 in New Orleans. This will be the agency’s first scheduled sale under its current five-year leasing program (2002-2007).

The proposed sale will encompass 4,085 blocks, about 22.2 million acres, in the Western GOM Outer Continental Shelf Planning Area offshore Texas and in deeper waters offshore Louisiana. The blocks are located nine to 250 miles offshore in water depths ranging from eight meters to more than 3,000 meters, according to the agency.

Estimates of undiscovered economically recoverable reserves expected to be discovered and produced as a result of the sale range from 10 million to 90 million barrels of oil and 0.57 Tcf to 1.93 Tcf of natural gas, MMS said

A proposed royalty suspension will apply for blocks in water depths of more than 200 meters where new deep gas is drilled and begins production within the initial five-year lease term. The suspension would be for the first 20 Bcf of deep-gas production, the agency noted.

The MMS said it also will offer royalty suspension on production from tracts located in deep waters of the western Gulf, ranging from 400 meters to 1,600 meters and deeper. The royalty holiday would apply to the first 5 million barrels of oil equivalent (400 meters to 799 meters); 9 million boe (800 meters to 1,599 meters); and 12 million boe (1,600 meters and deeper).

More information on the proposed sale can be obtained from the MMS web site at https://www.mms.gomr.gov, or by calling the agency’s office in New Orleans at (504) 736-2591.

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