MMS announces slightly modified 5-year lease schedule

Maureen Lorenzetti
Washington Editor

WASHINGTON, DC, Mar. 19 -- The US Minerals Management Service Mar. 18 proposed a 2002-07 offshore lease sale schedule that closely resembles a preliminary plan the agency announced last October.
The schedule does not propose a sale in any area currently under congressional spending moratoriums or presidential withdrawals. Those areas are off the East and West coasts and in parts of the eastern Gulf of Mexico (OGJ Online, Oct. 26, 2001).
The proposed final program schedules a total of 20 lease sales in eight Outer Continental Shelf planning areas located off the Gulf Coast states and Alaska, carrying forward the provisions of the previous proposals with one adjustment.
MMS revised its proposal for two lease sales in the Chukchi Sea-Hope Basin area off Alaska. That area has been adjusted to convert those sales to the "special" category that originally was devised for the Norton Basin Planning Area, MMS said. MMS now plans to issue a request for interest in May 2002, and if industry interest is not expressed, the sale process ends. If there is sufficient interest, MMS plans to proceed with the remaining steps leading to holding the sale.
The same procedures will be followed the next year and annually until one or both proposed sales are held or the 2002-07 program ends.
MMS last October said it plans Beaufort Sea and Norton basin sales in 2003, Cook Inlet-Shelikof Strait and Chukchi Sea-Hope basin sales in 2004, a Beaufort Sea sale in 2005, a Cook Inlet-Shelikof Strait sale in 2006, and Beaufort Sea and Chukchi Sea-Hope basin sales in 2007.
MMS still also plans to hold annual central and western gulf sales and eastern gulf sales in 2003 and 2005.

OCS leasing program
About 84% of federal oil and gas revenues are produced from OCS leases, according to MMS. US officials estimate MMS will collect about $4.2 billion in revenues next year from minerals, mostly oil and gas, produced from offshore and onshore federal and Indian lands.
As required by law, MMS's 5-year proposal will be submitted to Congress for review. After 60 days, the secretary of the Interior may finalize the new program, which would take effect on July 1, 2002, and replace the current program due to expire at the end of June.
Speaking before the National Ocean Industries Association, Interior Sec. Gale Norton said oil and gas produced from the OCS represents one fourth of US production. She said the leases under the new sale schedule will make available postulated resources totaling 10.2-21.5 billion bbl of oil and 40-60.6 tcf of natural gas.
However, industry interest in lease sales may not reach the historic levels seen in the late 1990s, MMS told a House Subcommittee on Resources Mar. 11. During that time a combination of very favorable geological characteristics, technological advances, and economic incentives caused leasing in the Gulf of Mexico to increase almost tenfold during 1992-97, according to MMS.
The agency, however, still expects to see what it calls "good" or "average" interest in future lease sales despite the difficult capital crunch some bidders are now facing.