[Federal Register Volume 63, Number 30 (Friday, February 13, 1998)]
[Notices]
[Pages 7480-7481]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3531]
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
Minerals Management Service
Outer Continental Shelf, Central Gulf of Mexico; Notice of
Leasing Systems, Sale 169
Section 8(a)(8) (43 U.S.C. 1337(a)(8)) of the Outer Continental
Shelf Lands Act (OCSLA) requires that, at least 30 days before any
lease sale, a Notice be submitted to the Congress and published in the
Federal Register:
1. Identifying the bidding systems to be used and the reasons for
such use; and
2. Designating the tracts to be offered under each bidding system
and the reasons for such designation.
This notice is published pursuant to these requirements.
1. Bidding systems to be used. In the Outer Continental Shelf (OCS)
Sale 169, blocks will be offered under the following two bidding
systems as authorized by section 8(a)(1) (43 U.S.C. 1337(a)(1)), as
amended: (a) Bonus bidding with a fixed 16\2/3\ percent royalty on all
unleased blocks in less than 200 meters of water; and (b)(i) bonus
bidding with a fixed 16\2/3\-percent royalty on all unleased blocks in
200 to 400 meters of water with potential for a royalty suspension
volume of up to 17.5 million barrels of oil equivalent; (ii) bonus
bidding with a fixed 12\1/2\-percent royalty on all unleased blocks in
400 to 800 meters of water with potential for a royalty suspension
volume of up to 52.5 million barrels of oil equivalent; and (iii) bonus
bidding with a fixed 12\1/2\-percent royalty on all unleased blocks in
water depths of 800 meters or more with potential for a royalty
suspension volume of up to 87.5 million barrels of oil equivalent.
For bidding systems (b)(i), (ii), and (iii), the royalty suspension
allocation rules are described in the Interim Rule (30 CFR Part 260)
addressing royalty relief for new leases that was published in the
Federal Register on March 25, 1996 (61 FR 12022).
a. Bonus Bidding with a 16\2/3\-Percent Royalty. This system is
authorized by section (8)(a)(1)(A) of the OCSLA. This system has been
used extensively since the passage of the OCSLA in 1953 and
[[Page 7481]]
imposes greater risks on the lessee than systems with higher
contingency payments but may yield more rewards if a commercial field
is discovered. The relatively high front-end bonus payments may
encourage rapid exploration.
b.(i) Bonus Bidding with a 16\2/3\-Percent Royalty and a Royalty
Suspension Volume (17.5 million barrels of oil equivalent). This system
is authorized by section (8)(a)(1)(H) of the OCSLA, as amended. This
system complies with Sec. 304 of the Outer Continental Shelf Deep Water
Royalty Relief Act (DWRRA). An incentive for development and production
in water depths of 200 to 400 meters is provided through allocating
royalty suspension volumes of 17.5 million barrels of oil equivalent to
eligible fields.
b.(ii) Bonus Bidding with a 12\1/2\-Percent Royalty and a Royalty
Suspension Volume (52.5 million barrels of oil equivalent). This system
is authorized by section (8)(a)(1)(H) of the OCSLA, as amended. It has
been chosen for blocks in water depths of 400 to 800 meters proposed
for the Central Gulf of Mexico (Sale 169) to comply with Sec. 304 of
the DWRRA. The 12\1/2\-percent royalty rate is used in deeper water
because these blocks are expected to require substantially higher
exploration, development, and production costs, as well as longer times
before initial production, in comparison to shallow-water blocks. The
use of a royalty suspension volume of 52.5 million barrels of oil
equivalent for eligible fields provides an incentive for development
and production appropriate for this water depth category.
b.(iii) Bonus Bidding with a 12\1/2\-Percent Royalty and a Royalty
Suspension Volume (87.5 million barrels of oil equivalent). This system
is authorized by section (8)(a)(1)(H) of the OCSLA, as amended. It has
been chosen for blocks in water depths of 800 meters or more proposed
for the Central Gulf of Mexico (Sale 169) to comply with Sec. 304 of
the DWRRA. The use of a royalty suspension volume of 87.5 million
barrels of oil equivalent for eligible fields provides an incentive for
development and production appropriate for these deep-water depths.
2. Designation of Blocks. The selection of blocks to be offered
under the four systems was based on the following factors:
a. Royalty rates on adjacent, previously leased tracts were
considered to enhance orderly development of each field.
b. Blocks in deep water were selected for the 12\1/2\-percent
royalty system based on the favorable performance of this system in
these high-cost areas in past sales.
c. The royalty suspension volumes were based on the water depth
specific volumes mandated by the DWRRA.
The specific blocks to be offered under each system are shown on
the ``Lease Terms, Bidding Systems, and Royalty Suspension Areas, Sale
169'' map for Central Gulf of Mexico Lease Sale 169. This map is
available from the Public Information Unit, Minerals Management
Service, 1201 Elmwood Park Boulevard, New Orleans, Louisiana 70123-
2394.
Approved:
Thomas A. Readinger,
Acting Associate Director, Minerals Management Service.
Dated: February 6, 1998.
Bob Armstrong,
Assistant Secretary, Land and Minerals Management.
[FR Doc. 98-3531 Filed 2-12-98; 8:45 am]
BILLING CODE 4310-MR-M
