NGI The Weekly Gas Market Report
Interior Department’s Minerals Management Service (MMS) is proposing to amend its regulations to provide credits to producers that relinquish eligible leases within 125 miles of the Florida coastline.
The proposed rule for oil and natural gas leases on the federal Outer Continental Shelf was mandated by the Gulf of Mexico Energy Security Act of 2006, which opened part of the gas-rich Lease Sale 181 area in the eastern Gulf to producers. However, it barred drilling within 125 miles of the Florida coastline and in a portion of the Central Planning Area that is located within 100 miles of the Sunshine State. The act allowed for the exchange of existing leases in these areas for bonus or royalty credits.
The amended rule will identify the eligible leases and will establish how the credits may be used, according to MMS. It would provide a credit equal to the bonus bid originally paid plus subsequent rental payments to lessees who relinquish leases within the specified areas. Lessees may use the credits in lieu of monetary payment for either a lease bonus bid or royalty due on oil and gas production from most other leases in the Gulf of Mexico or transfer the credits to other parties for use as bonus bid or royalty payments due on most Gulf leases, the agency said.
Comments on the proposed MMS rule are due within 60 days. The agency said comments must be identified with RIN 1010-AD44.
The Gulf of Mexico Energy Security Act, which was signed by President Bush in December 2006, was considered the most significant action on energy taken by Congress in 2006 (see NGI, Dec. 25, 2006). It made 8.3 million acres in the Lease Sale 181 area in the eastern Gulf and in a tract south of Lease Sale 181 available for oil and gas leasing.
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