U.S. Minerals Management Service predicts the Mar. 17 Central Gulf of Mexico lease sale in New Orleans will be smaller than in previous years.
MMS Deputy Director Tom Kitsos said, "We understand that the fall in world oil prices has affected the capital available for exploration and production in the U.S., and we anticipate a reduction in both the level of bidding and the number of companies participating in this upcoming lease sale."
What's availableSale No. 172 will offer 3,807 blocks encompassing about 20.37 million acres off Louisiana, Mississippi, and Alabama. Blocks are 3-200 miles offshore in water depths from 4 m to more than 3,425 m. Kitsos said, "This is the fourth annual central Gulf of Mexico sale in which blocks in depths of 200 m or more are eligible for royalty relief under the Deep Water Royalty Relief Act. Royalty relief has contributed to an unprecedented level of new activity in the Gulf of Mexico. In this sale, there are 2,970 deepwater blocks."
Eligible for royalty relief are 58 blocks in 200-400 m of water, 102 blocks in 400-800 m of water, and 2,810 blocks in more than 800 m of water.
Of the total, 895 blocks are in less than 400 m of water and will be leased for 5-year terms and a 162/3% royalty.
All remaining blocks carry a 12.5% royalty. The blocks in 400-800 m of water will be offered for 8-year terms. And the blocks in more than 800 m of water carry 10-year terms.
Minimum bids are $25/acre (or fraction thereof) for all blocks in less than 800 m of water and $37.50/acre for all blocks in more than 800 m.
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