Natural gas production from the deep water Gulf of Mexico hasincreased 252% over the last five years, from 159 Bcf in 1994 to560 Bcf in 1998, according to the Department of Interior’s MineralsManagement Service.

The increase in deep water production bolstered overall GOMfigures from the 1994 total of 4.8 Tcf to 5.01 Tcf in 1998.

“The 1998 increase is significant and of national importance,”said new MMS Director Walt Rosenbusch. He noted the profile of Gulfof Mexico producers is changing with larger companies concentratingon the deep water, while independents focus on prospects closer tothe shore. He credited the deep water Royalty Relief Act withencouraging the more expensive deep water drilling programs. “Therehas been growth of tremendous proportions in the number of activeleases” since the program was installed, Rosenbusch told reportersin his first briefing since taking office last May.

Noting that royalty relief expires in Aug., 2000, Rosenbuschsaid the MMS has asked industry what needs to be done going forwardto encourage deep water drilling. He said, however, the industrynow has a large inventory of leases and there are two more deepwater lease sales before next August.

Rosenbusch said he is dedicated to continuing the MMS as thebest resource manager in the world, and to the ongoing effort tore-engineer the department’s royalty management program. “Parallelwith the industry, we are looking at new philosophies, newtechniques.” One of the new techniques is the royalty-in-kind(RIK) pilot projects currently underway for gas and oil.Questioned, he said the MMS had no dates in mind for puttingfull-fledged programs into effect. He noted the three programsunderway were testing various aspects of the idea and cautionedthat RIK was “not an option in all instances……We’re continuingto develop and refine the process. This is part of there-engineering. We’ll continue to look at other ways to do RIK.”

Rosenbusch, who served for a time with the Texas General LandOffice, said he generally had a positive relationship with the oiland gas industry.

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