World
  |
|
US MMS details plans for August 22 Western Gulf lease sale
Platts
Washington
Petroleumworld.com 04 12 07
The US Minerals Management Service Wednesday issued details on its next
Western Gulf of Mexico lease sale, which is scheduled to be held on August 22
in New Orleans.Lease Sale 204, which could include as many as 3,400 lease blocks on 18
million acres offshore Louisiana and Texas, will be the first sale to include
higher deepwater royalty rates, as ordered by the Bush administration in
January.Gulf of Mexico offshore deepwater federal oil and gas leases had been
eligible for a royalty rate of 12.5% to encourage development in areas, which
require huge capital costs and are considered high risk by the oil and gas
industry. But that rate was lifted to 16.66%, the same as the royalty rate for
all other water depths, a move that the Interior Department said could lift
revenues by $4.5 billion over 20 years.MMS intends to offer an initial five-year term for blocks in water depths
between 400 meters and 800 meters, but terms for those leases can be extended
out to eight years, if drilling operations begin within the first five
years. Rental fees would be stepped up each additional year granted -- from
$9.50/acre for the initial term to $25/acre by year eight.The rental rate for leases in water depth of less than 200 meters is
6.25/acre, with five-year initial terms. Blocks in water depths of 800 meters
or deeper would be given an initial 10-year term, with a rental rate of
$9.50/acre.MMS also warned potential bidders that if the Congress or the Bush
administration approves the elimination of deepwater royalty relief prior to
July 1, 2007, then no royalty relief would be offered for Sale 204.The US House of Representatives passed a bill earlier this year to
completely suspend deepwater royalty relief, while President George W. Bush's
fiscal 2008 budget for the Interior Department also calls to eliminate the
relief. Under the current system, leaseholders do not have to pay royalties
for a specified volume of initial oil and gas produced from their deepwater
wells. Initial volumes vary, depending on water depth.--Cathy Landry, cathy_landry@platts.com
This is an excerpt. For more news, request a free trial to Platts Oilgram
News at
http://www.platts.com/Request%20More%20Information/index.xml?src=story
or subscribe now at
http://www.platts.com/infostore/product_info.php?cPath=1_29&products_id=29
Platts 11 04 07
Copyright© 2007 Platts. All Rights Reserved.
Your
feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.
Write to editor@petroleumworld.com
Any
question or suggestions, please write to:
editor@petroleumworld.com
Best
Viewed with IE
5.01+
Windows
NT 4.0, '95, '98 and ME +/ 800x600 pixels