04-2010. Outer Continental Shelf (OCS), Alaska Region, Chukchi Sea/Hope Basin

AGENCY:

Minerals Management Service (MMS), Interior.

ACTION:

Call for Information and Nominations.

SUMMARY:

The Secretary's decision to consider offering the Chukchi Sea/Hope Basin planning area in the OCS Oil and Gas Leasing Program for 2002-2007 provides for an 18-month “special-interest” process beginning with publication of this Call. Based on the information and specific nominations received as a result of this Call, a decision will be made whether to proceed with a sale.

DATES:

Nominations and comments on the Call must be received no later than April 29, 2004.

FOR FURTHER INFORMATION CONTACT:

Please call Tom Warren at [phone] in MMS's Alaska OCS Region regarding questions on the Call.

SUPPLEMENTARY INFORMATION:

The objective of this “special-interest” leasing option is to foster exploration in a frontier OCS area of potential, but high economic cost, without investment of the considerable time and effort required for holding a typical lease sale. The general approach is to query industry regarding the level of interest in proceeding with a sale in the Chukchi Sea/Hope Basin that would offer only very small, very focused areas of specific interest for exploration and to request nominations of such areas. The lease sale is being proposed to provide opportunities for industry to pursue the high resource potential of the Chukchi Sea area in conjunction with potential natural gas resources that may extend into the adjacent Hope Basin area. We also request comments from the general public on this special-interest leasing process, including the terms and conditions of a sale. The MMS will consider all comments and nominations in the decision on whether and where within the Chukchi Sea/Hope Basin to proceed with leasing and on the terms and conditions of a lease sale proposal. A decision to offer a nominated area for leasing will depend on a commitment from industry to explore the area leased within a specific time period.

This is the second Call issued for the Chukchi Sea/Hope Basin for this 5-year program. The first Call was published in the Federal Register on March 25, 2003. No interest was expressed; therefore, the process was stopped and deferred to this year. If no interest is expressed in response to this Call, the MMS will defer the sale for one year and reissue the Call the following year. This process will continue throughout the 5-year program until there is sufficient interest to proceed with the planning steps toward a sale. No more than two rounds of lease issuance in the Chukchi Sea/Hope Basin would occur during this 5-year program.

This Call does not indicate a preliminary decision to lease in the area described below. If the MMS decides to proceed with the sale process, the MMS will make the final decision on the specific areas for possible leasing at a later date in the presale process and in compliance with the 5-year program and with applicable laws including all requirements of the National Environmental Policy Act (NEPA) and the OCS Lands Act (OCSLA). The MMS may adjust the dimensions of a nominated area after discussions with the nominating company.

Call for Information and Nominations

1. Authority

This Call is published pursuant to the OCS Lands Act, as amended (43 U.S.C. 1331-1356, [1994]), and the regulations issued thereunder (30 CFR part 256 and 30 CFR part 260); and in accordance with the OCS Oil and Gas Leasing Program 2002 to 2007, approved June 27, 2002.

2. Purpose of Call

The purpose of the Call is to gather preliminary information, to request nomination of specific areas of interest to industry, and to request comments on the terms and conditions of offering these special-interest lands. The Call also serves to initiate public outreach to assist in preparation of the NEPA analysis for this proposal. This proposal is in keeping with Sec. 102(9) of the OCS Lands Act Amendments of 1978, which states as a purpose of the statute, “ * * *to insure that the extent of oil and natural gas resources of the OCS is assessed at the earliest practicable time.” The objective of the “special-interest” leasing process is to encourage exploration in a frontier OCS area that might contain natural gas for potential use in local communities, as well as oil to meet national energy needs. The sale would offer for lease both oil and gas.

We seek comments, information, and nominations on oil and gas leasing, exploration, and development and production within the Chukchi Sea/Hope Basin are sought from all interested parties. We also seek comments on the terms, conditions, and economic incentives of a sale in the Chukchi Sea/Hope Basin. We strongly encourage industry and other interested parties to contact the MMS, Alaska OCS Region, Mr. Tom Warren at [phone], with questions or to discuss interest in the area. This early planning and consultation step is particularly important to this special-interest lands process. The MMS will base its decision on whether to proceed with the presale process and the terms and conditions of a sale on the nominations and other information received in response to this Call. This process will ensure a decision that considers the concerns of all respondents in future decisions in this leasing process pursuant to the OCS Lands Act and regulations at 30 CFR part 256 and 30 CFR part 260. We also encourage commenters to submit comments and suggestions on the “special-interest” leasing process in general using this process.

This Call is being issued in accordance with the OCS Oil and Gas Leasing Program 2002 to 2007, approved June 27, 2002. The program offers two sales in the Chukchi Sea/Hope Basin during the 5-year program. If no interest is expressed in response to this Call, the MMS will defer the sale for one year and reissue the Call the following year. This process will continue throughout the 5-year program until there is sufficient interest to proceed with the planning steps toward a sale. No more than two rounds of lease issuance in the Chukchi Sea/Hope Basin would occur during this 5-year program.

3. Description of Area

The area subject to this Call is located offshore the State of Alaska in the Chukchi Sea, between Cape Krusenstern and Point Barrow. The Chukchi Sea area consists of approximately 6,155 whole and partial blocks (about 34 million acres). It extends offshore from about 10 to approximately 200 miles in water depths from about 32 feet to approximately 230 feet. A small portion of the northeast corner of the area drops to approximately 3,000 feet. The Hope Basin area consists of approximately 1,243 whole and partial blocks (about 6 1/2 million acres). It extends offshore from about 3 to approximately 110 miles in water depths from about 32 feet to approximately 230 feet.

A page-size map of the area accompanies this Notice. A large scale Call map showing the boundaries of the area on a block-by-block basis is available without charge from the Public Information Office at the address given below, or by telephone request at [phone] or 1-800-764-2627. Copies of Official Protraction Diagrams (OPDs) are also available for $2 each.

Alaska OCS Region, Minerals Management Service, 949 East 36th Avenue, Room 308, Anchorage, Alaska 99508-4302, [e-mail].

4. Instructions on Call

The Call for Information Map and indications of interest and/or comments must be submitted to the Regional Supervisor, Leasing and Environment, at the above address.

The Call map delineates the area that is the subject of this Call. Respondents are requested to indicate very specific areas of interest in and comment on the Federal acreage within the boundaries of the Call area that they wish to have included in a proposed sale in the Chukchi Sea/Hope Basin.

If you wish to comment, you may submit your comments by any one of the following methods:

• You may mail comments to the Alaska OCS Region, Minerals Management Service, 949 East 36th Avenue, Room 308, Anchorage, Alaska 99508-4302.
• You may also comment via e-mail to [e-mail]. Please submit Internet comments as an ASCII file avoiding the use of special characters and any form of encryption. Please also include “Attn: Comments on Call for Information and Nominations for Proposed 2005 Lease Sale in the Chukchi Sea/Hope Basin” and your name and return address in your Internet message.
• Finally, you may hand deliver comments to the Alaska OCS Region, Minerals Management Service, 949 East 36th Avenue, Room 308, Anchorage, Alaska 99508-4302.

Our practice is to make comments, including names and addresses of respondents, available for public review during regular business hours. Individual respondents may request that we withhold their address from the rulemaking record, which we will honor to the extent allowable by law. Under certain circumstances we can withhold a respondent's identity, as allowable by law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comment. However, we will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety.

A. Areas of Interest to the Oil and Gas Industry. Industry must be candid and very specific regarding the areas they nominate if this process is to succeed. The purpose of this process is to identify and offer only small-focused areas where industry has a significant interest in exploration. Nominations covering large-scale areas will not be helpful in defining these areas.

Nominations must be depicted on the Call map by outlining the area(s) of interest along block lines. Nominators are asked to submit a list of whole and partial blocks nominated (by OPD and block number) to facilitate correct interpretation of their nominations on the Call map. Although the identities of those submitting nominations become a matter of public record, the individual nominations are proprietary information. The telephone number and the name of a person to contact in the nominator's organization for additional information should be included in the response. This person will be contacted to set up a mutually agreeable time and place for a meeting with the Alaska OCS Regional Office to present their views regarding the company's nominations.

B. Terms, Conditions, and Economic Incentives Pertaining to Lease Issuance. We request respondents to comment on the terms, conditions, and economic incentives pertaining to lease issuance for any leases that may be issued as a result of a sale in the Chukchi Sea/Hope Basin. The MMS is aware of the lack of infrastructure and distance from shore to some of the blocks in this area and will consider these factors in designing any incentives. The following are being considered for use in this sale:

• Lease term of 10 years
• Submission of an exploration plan within 8 years of lease issuance
• Economic incentives similar in form to those contained in the Notice of Sale for Beaufort Sea Sale 186 (68 FR 50549). Incentives for Beaufort Sea Sale 186 were:
• Royalty suspension volumes for oil production (with possible consideration for gas)
• Reduced rental rates
• Lower minimum bid requirements

C. Relation to Coastal Management Plans (CMPs). We also seek comments on potential conflicts with approved local CMPs that may result from the proposed sale and future OCS oil and gas activities. These comments should identify specific CMP policies of concern, the nature of the conflicts foreseen, and steps that MMS could take to avoid or mitigate the potential conflicts. Comments may be in terms of broad areas or restricted to particular blocks of concern. We request commenters to list block numbers or outline the subject area on the large-scale Call map.

5. Use of Information From Call

Information submitted in response to this Call will be used for several purposes. We will use responses to:

• Determine whether to proceed with a competitive oil and gas lease sale in the Chukchi Sea/Hope Basin
• Identify specific areas of interest for oil and/or gas exploration and development
• Identify environmental effects and potential use conflicts
• Assist in the public outreach for the environmental analysis
• Develop possible alternatives to the proposed action
• Develop lease terms and conditions/mitigating measures
• Identify potential conflicts between oil and gas activities and the Alaska CMP

6. Existing Information

An extensive environmental, social, and economic studies program has been underway in the Alaska OCS Region since 1976, including studies in this area. The emphasis has been on geologic mapping, environmental characterization of biologically sensitive habitats, endangered whales and marine mammals, physical oceanography, ocean-circulation modeling, and ecological and socio-cultural effects of oil and gas activities.

The MMS has had two past sales in the Chukchi Sea area. In May 1988, Sale 109 was held and resulted in 350 leases being issued. In August 1991, Sale 126 was held and resulted in 28 leases being issued. There were four exploratory wells drilled, but all have been permanently plugged and abandoned. All 378 leases have since been relinquished or expired. No lease sales have been held in the Hope Basin area. The Alaska OCS Region document “Undiscovered Oil and Gas Resources, Alaska Federal Offshore, December 2000 Update” (http://www.mms.gov/​alaska/​re/​uogr.pdf), estimates the undiscovered conventionally recoverable resources at:

Area	Oil and NGL (BBO)			Gas (TCFG)			BOE (BBO)			MPhc
	F95	Mean	F05	F95	Mean	F05	F95	Mean	F05
CHUKCHI SHELF	8.60	15.46	25.03	13.56	60.11	154.31	11.32	26.21	49.60	1.00
HOPE BASIN	0.00	0.09	0.28	0.00	3.38	11.06	0.00	0.69	2.25	0.61
BBO, billions of barrels of oil and natural gas liquids; TCFG, trillions of cubic feet; BOE, total oil and gas in billions of energy-equivalent barrels (5,620 cubic feet of gas=1 energy-equivalent barrel of oil); reported MEAN, resource quantities at the mean in cumulative probability distributions; F95, the resource quantity having a 95-percent probability of being met or exceeded; F05, the resource quantity having a 5-percent probability of being met or exceeded; MPhc, marginal probability for hydrocarbons for basin, i.e., chance for the existence of at least one pool of undiscovered, conventionally recoverable hydrocarbons somewhere in the basin. Resource quantities shown are risked, that is, they are the product of multiplication of conditional resources and Mphc. All liquid resources in Norton basin are natural gas liquids that would only be recovered by natural gas production.

Information on the studies program, completed studies, and a program status report for continuing studies in this area may be obtained from the Chief, Environmental Studies Section, Alaska OCS Region, by telephone request at [phone], or by written request at the address stated under Description of Area. A request may also be made via the Alaska OCS Region Web site at http://www.mms.gov/​alaska/​ref/​pubindex/​pubsindex.htm.

7. Tentative Schedule

If MMS receives specific nominations from industry in response to this Call and decides to proceed with the pre-sale process, the following is a list of tentative milestone dates applicable to a Chukchi Sea/Hope Basin sale in 2005:

	Tentative process milestones for proposed 2005 Chukchi Sea/Hope Basin Sale
Call published/public outreach initiated	January 2004.
Comments due on Call	April 2004.
Decision whether to proceed/Area Identification	May 2004.
NEPA analysis	February 2005.
Consistency Determination/Proposed Notice of Sale	April 2005.
Governor's Comments due	June 2005.
Final Notice of Sale published	August 2005.
Sale	September 2005.

Dated: January 20, 2004.

R.M. Burton,

Director, Minerals Management Service.