[Federal Register Volume 66, Number 141 (Monday, July 23, 2001)]
[Notices]
[Pages 38311-38314]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18399]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service


Outer Continental Shelf, Central Gulf of Mexico, Oil and Gas 
Lease Sale 178, Part 2

AGENCY: Minerals Management Service, Interior.

ACTION: Final Notice of Sale 178, Part 2.

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SUMMARY: This Final Notice of Sale 178, Part 2, offers for lease only 
those blocks in the Central Gulf of Mexico that are beyond the United 
States Exclusive Economic Zone (in the area formerly known as the 
Northern Portion of the Western Gap) (in the Amery Terrace Area (NG15-
09)), except for those blocks or portions of blocks which are in the 
1.4 nautical mile buffer zone north of the continental shelf boundary 
between the United States and Mexico.
    On August 22, 2001, the Minerals Management Service will open and 
publicly announce bids received for blocks offered in Sale 178, Part 2, 
Central Gulf of Mexico, pursuant to the Outer Continental Shelf Lands 
Act (43 U.S.C. 1331-1356, as amended) and the regulations issued 
thereunder (30 CFR Part 256). Bidders can obtain a ``Final Notice of 
Sale 178, Part 2 Package'' containing this Notice of Sale and

[[Page 38312]]

several supporting and essential documents referenced herein, from the 
MMS Gulf of Mexico Region's Public Information Unit, 1201 Elmwood Park 
Boulevard, New Orleans, Louisiana 70123-2394, (504) 736-2519 or (800) 
200-GULF, or via the MMS Gulf of Mexico Region's Internet site at 
http://www.gomr.mms.gov. The ``Final Notice of Sale 178, Part 2 
Package'' contains information essential to bidders, and bidders are 
charged with the knowledge of the documents contained in the package.

LOCATION AND TIME: Public bid reading for this sale will begin after 
the public bid reading for Western Gulf Sale 180 (which begins at 9 
a.m.), Wednesday, August 22, 2001, in the Hyatt Regency Conference 
Center (Cabildo Rooms), 500 Poydras Plaza, New Orleans, Louisiana. All 
times referred to in this document are local New Orleans time.

FILING OF BIDS: Bidders must submit sealed bids to the Regional 
Director, MMS Gulf of Mexico Region, 1201 Elmwood Park Boulevard, New 
Orleans, Louisiana 70123-2394, between 8 a.m. and 4 p.m., prior to the 
Bid Submission Deadline of 10 a.m., Tuesday, August 21, 2001. If the 
bids are mailed, mark on the envelope containing all the sealed bids 
the following: Attention: Mr. John Rodi, Contains Sealed Bids for Sale 
178, Part 2.
    If the RD receives bids later than the time and date specified 
above, he will return the bids unopened to bidders. Bidders may not 
modify or withdraw their bids unless the RD receives a written 
modification or written withdrawal request prior to 10 a.m., Tuesday, 
August 21, 2001. In the event of widespread flooding or other natural 
disaster, the MMS Gulf of Mexico Regional Office may extend the bid 
submission deadline. Bidders may call (504) 736-0557 for information 
about the possible extension of the bid submission deadline due to such 
an event.

AREAS OFFERED FOR LEASING: The MMS is offering for leasing all blocks 
and partial blocks listed as offered below. All of these blocks are 
shown on the following Official Protraction Diagram (which may be 
purchased from the MMS Gulf of Mexico Regional Office Public 
Information Unit).

Outer Continental Shelf Official Protraction Diagram

(This diagram sells for $2.00)
NG15-09 Amery Terrace (revised October 25, 2000)

    See the map titled ``Lease Terms and Economic Conditions, Deferred 
Blocks, Sale 178, Part 2, Final'' included in this Sale Notice Package.


    Note: A CD-ROM (in ARC/INFO and Acrobat (.pdf) formats) 
containing all of the Gulf of Mexico Leasing Maps and Official 
Protraction Diagrams, except for those not yet revised to digital 
format, is available from the MMS Gulf of Mexico Regional Office 
Public Information Unit for a price of $15.00. The Leasing Maps and 
Official Protraction Diagrams are also available on our Internet 
site. See also 66 FR 28002, published on May 21, 2001, for the 
current status of Central and Western Gulf of Mexico Leasing Maps 
and Official Protraction Diagrams.


    The blocks and partial blocks offered in this sale are beyond the 
United States Exclusive Economic Zone (formerly known as the Western 
Gap). Not offered in this sale are those blocks or portions of blocks 
which are in the 1.4 nautical mile buffer zone north of the continental 
shelf boundary between the United States and Mexico. Both the zone, in 
which leasing is prohibited for ten years, and the boundary were 
established by the ``Treaty Between The Government Of The United States 
Of America And The Government Of The United Mexican States On The 
Delimitation Of The Continental Shelf In The Western Gulf Of Mexico 
Beyond 200 Nautical Miles'' signed by the United States and Mexico on 
June 9, 2000; the U.S. Senate gave advice and consent to ratification 
on October 18, 2000, and the Mexican Senate gave its approval on 
November 28, 2000. The provisions of the treaty entered into force upon 
exchange of the instruments of ratification of the treaty on January 
17, 2001.
    The following blocks or partial blocks are offered in this sale:

Amery Terrace (Area NG15-09) Blocks
    133 through 135
    177 through 184
    221 through 238
    265 through 279
    309 through 317

    The portions of the following blocks lying within the 1.4 nautical 
mile buffer zone are deferred from this sale:

Amery Terrace (Area NG15-09) Blocks
    235 through 238
    273 through 279
    309 through 317

    The available Federal acreage of all whole and partial blocks in 
this sale is given in the document ``List of Blocks Available for 
Leasing, Sale 178, Part 2'' included in the Sale Notice Package. The 
available acreage for all blocks in this sale with deferred portions 
lying within the 1.4 nautical mile buffer zone is provided in the 
document, ``Available Unleased Acreage of Blocks with Irregular 
Portions Deferred'' which is included in the Final Sale Notice Package. 
Also, Supplemental Official OCS Block Diagrams for these blocks and for 
blocks which contain the ``U.S. 200 Nautical Mile Limit'' line and the 
``U.S.-Mexico Maritime Boundary'' line are available from the Public 
Information Unit, Gulf of Mexico Region, Minerals Management Service, 
1201 Elmwood Park Boulevard, New Orleans, Louisiana 70123-2394. 
Telephone: (504) 736-2519. All these SOBDs can also be found on the MMS 
Homepage Address on the Internet: http://www.mms.gov. For additional 
information, please call Mr. Charles Hill (504) 736-2795.

    Note: In addition to the previously noted partially deferred 
blocks, the following blocks of the former Western Gap are wholly 
within the 1.4 nautical mile buffer zone and are not offered in this 
sale:


Amery Terrace (Area NG15-09) Blocks
    280, 281
    318 through 320
    355 through 359

    Leasing Terms and Conditions: Primary lease terms, minimum bids, 
annual rental rates, royalty rates, and royalty suspension areas for 
leases resulting from this sale are:
    Primary lease terms: 10 years;
    Minimum bids: $37.50 per acre or fraction thereof;
    Annual rental rates: $7.50 per acre or fraction thereof, to be paid 
on or before the first day of each lease year until a discovery in 
paying quantities of oil or gas is made, then at the expiration of each 
lease year until the start of royalty-bearing production;
    Royalty rates: 12\1/2\ percent royalty rate, except during periods 
of royalty suspension, to be paid monthly on the last day of the month 
next following the month in which the production is obtained;
    Minimum royalty: After the start of royalty-bearing production: 
$7.50 per acre or fraction thereof per year, to be paid at the 
expiration of each lease year;
    Royalty Suspension Areas: Leases are being offered in this sale 
subject to the regulations in 30 CFR Part 260, published in the Federal 
Register at 66 FR 11512 on February 23, 2001. Deep water oil and gas 
royalty suspension will apply to all blocks; see the document contained 
within the Sale 178, Part 2, Final Notice Package titled ``Royalty 
Suspension Provisions (Sale 178, Part 2)'' for the specific details 
regarding royalty suspension eligibility and implementation. In 
addition to those provisions, the royalty payment stipulation included 
at the end of this Notice will be made a part of any lease resulting 
from this sale.

[[Page 38313]]

    Rounding: The following procedure must be used to calculate minimum 
bid, rental, and minimum royalty on blocks with fractional acreage: 
Round up to the next whole acre and multiply by the applicable dollar 
amount to determine the correct minimum bid, rental, or minimum 
royalty.

    Note: For the minimum bid only, if the calculation results in a 
decimal figure, round up to the next whole dollar amount (see next 
paragraph). The minimum bid calculation, including all rounding, is 
shown in the document ``List of Blocks Available for Leasing in 
Central Gulf of Mexico OCS Oil and Gas Sale 178, Part 2'' included 
in the Sale Notice Package.


    Method of Bidding: For each block bid upon, a bidder must submit a 
separate signed bid in a sealed envelope labeled ``Sealed Bid for Oil 
and Gas Lease Sale 178, Part 2, not to be opened until 9 a.m., 
Wednesday, August 22, 2001.'' The total amount bid must be in a whole 
dollar amount; any cent amount above the whole dollar will be ignored 
by the MMS. Details of the information required on the bid(s) and the 
bid envelope(s) are specified in the document ``Bid Form and Envelope'' 
contained in the Sale Notice Package.
    The MMS published a list of restricted joint bidders, which applies 
to this sale, in the Federal Register at 66 FR 17731, on April 3, 2001. 
Bidders must execute all documents in conformance with signatory 
authorizations on file in the MMS Gulf of Mexico Regional Office. 
Partnerships also must submit or have on file a list of signatories 
authorized to bind the partnership. Bidders submitting joint bids must 
state on the bid form the proportionate interest of each participating 
bidder, in percent to a maximum of five decimal places, e.g., 33.33333 
percent. The MMS may require bidders to submit other documents in 
accordance with 30 CFR 256.46. The MMS warns bidders against violation 
of 18 U.S.C. 1860 prohibiting unlawful combination or intimidation of 
bidders. Bidders are advised that the MMS considers the signed bid to 
be a legally binding obligation on the part of the bidder(s) to comply 
with all applicable regulations, including paying the \1/5\th bonus on 
all high bids. A statement to this effect must be included on each bid 
(see the document ``Bid Form and Envelope'' contained in the Sale 
Notice Package).
    BID Deposit: Submitters of high bids must deposit the \1/5\th bonus 
by using electronic funds transfer procedures, following the detailed 
instructions contained in the document ``Instructions for Making EFT 
Bonus Payments'' included in the Sale Notice Package. All payments must 
be electronically deposited into an interest-bearing account in the 
U.S. Treasury (account specified in the EFT instructions) during the 
period the bids are being considered. Such a deposit does not 
constitute and shall not be construed as acceptance of any bid on 
behalf of the United States.


    Note: Certain bid submitters (i.e., those that do NOT currently 
own or operate an OCS mineral lease OR those that have ever 
defaulted on a \1/5\th bonus payment (EFT or otherwise)) are 
required to guarantee (secure) their \1/5\th bonus payment. For 
those who must secure the EFT \1/5\th bonus payment, one of the 
following options may be used: 1. Provide a third-party guaranty; 2. 
Amend Development Bond Coverage; 3. Provide a Letter of Credit; or 
4. Provide a lump sum payment via EFT prior to the submission of 
bids. The EFT instructions specify the requirements for each option.


    Withdrawal of Blocks: The United States reserves the right to 
withdraw any block from this sale prior to issuance of a written 
acceptance of a bid for the block.
    Acceptance, Rejection, or Return of Bids: The United States 
reserves the right to reject any and all bids. In any case, no bid will 
be accepted, and no lease for any block will be awarded to any bidder, 
unless the bidder has complied with all requirements of this Notice, 
including the documents contained in the associated Sale Notice Package 
and applicable regulations; the bid is the highest valid bid; and the 
amount of the bid has been determined to be adequate by the authorized 
officer. Any bid submitted which does not conform to the requirements 
of this Notice, the OCS Lands Act, as amended, and other applicable 
regulations may be returned to the person submitting that bid by the RD 
and not considered for acceptance. To ensure that the Government 
receives a fair return for the conveyance of lease rights for this 
sale, high bids will be evaluated in accordance with MMS bid adequacy 
procedures. A copy of the current procedures, ``Modifications to the 
Bid Adequacy Procedures'' (64 FR 37560 of July 12, 1999), effective 
July 1, 1999, is available from the MMS Gulf of Mexico Regional Office 
Public Information Unit and is also on our Internet site.
    Successful Bidders: As required by MMS, each company that has been 
awarded a lease must execute all copies of the lease (Form MMS-2005 
(March 1986) as amended), pay by EFT the balance of the cash bonus bid 
along with the first year's annual rental for each lease issued in 
accordance with the requirements of 30 CFR 218.155, and satisfy the 
bonding requirements of 30 CFR 256, Subpart I, as amended. Each bidder 
in a successful high bid must have on file, in the MMS Gulf of Mexico 
Regional Office Adjudication Unit, a currently valid certification 
(Debarment Certification Form) certifying that the bidder is not 
excluded from participation in primary covered transactions under 
Federal nonprocurement programs and activities. A certification 
previously provided to that office remains currently valid until new or 
revised information applicable to that certification becomes available. 
In the event of new or revised applicable information, the MMS will 
require a subsequent certification before lease issuance can occur. 
Persons submitting such certifications should review the requirements 
of 43 CFR, Part 12, Subpart D. A copy of the Debarment Certification 
Form is contained in the Sale Notice Package.
    Affirmative Action: The MMS requests that the certification 
required by 41 CFR 60-1.7(b) and Executive Order No. 11246 of September 
24, 1965, as amended by Executive Order No. 11375 of October 13, 1967, 
on the Compliance Report Certification Form, Form MMS-2033 (June 1985), 
and the Affirmative Action Representation Form, Form MMS-2032 (June 
1985), be on file in the MMS Gulf of Mexico Regional Office 
Adjudication Unit prior to bidding. In any event, these forms are 
required to be on file in the MMS Gulf of Mexico Regional Office 
Adjudication Unit prior to execution of any lease contract. Bidders 
must also comply with the requirements of 41 CFR 60.

INFORMATION TO LESSEES: The Sale Notice Package contains a document 
titled ``Information to Lessees.'' These Information to Lessees items 
provide information on various matters of interest to potential 
bidders.

STIPULATION: There is only one stipulation applicable to leases 
resulting from this sale.

Law of the Sea Convention Royalty Payment Stipulation

    The following stipulation will apply to all available blocks in 
this sale; these blocks are beyond the United States Exclusive Economic 
Zone in the area formerly known as the Western Gap:
    If the U.S. becomes a party to the 1982 Law of the Sea Convention 
(Convention) prior to or during the life of a lease issued by the U.S. 
on a block or portion of a block located beyond the U.S. EEZ and 
subject to such conditions that the Senate may impose through its 
constitutional role of advice and consent, then the following royalty 
payment lease provisions will apply to

[[Page 38314]]

the lease so issued, consistent with Article 82 of the Convention:
    1. The Convention requires payments annually by coastal States 
party to the Convention with respect to all production at a site after 
the first five years of production at that site. Any such payments will 
be made by the U.S. government and not the lessee.
    2. For the purpose of this stipulation regarding payments by the 
lessee to the U.S., a site is defined as an individual lease whether or 
not the lease is located in a unit.
    3. For the purpose of this stipulation, the first production year 
begins on the first day of commercial production (excluding test 
production). Once a production year begins it shall run for a period of 
365 days whether or not the lease produces continuously in commercial 
quantities. Subsequent production years shall begin on the anniversary 
date of first production.
    4. If total lease production during the first five years following 
first production exceeds the total royalty suspension volume(s) 
provided in the lease terms, or through application and approval of 
relief from royalties, the following provisions of this stipulation 
will not apply. If after the first five years of production but prior 
to termination of this lease, production exceeds the total royalty 
suspension volume(s) provided in the lease terms, or through 
application and approval of relief from royalties, the following 
provisions of this stipulation will no longer apply effective the day 
after the suspension volumes have been produced.
    5. If, in any production year after the first five years of lease 
production, due to lease royalty suspension provisions or through 
application and approval of relief from royalties, no lease production 
royalty is due or payable by the lessee to the U.S., then the lessee 
will be required to pay, as stipulated in paragraph 9 below, 
Convention-related royalty in the following amount so that the required 
Convention payments may be made by the U. S. government as provided 
under the Convention:
    a. In the sixth year of production, one percent of the value of the 
sixth year's lease production saved, removed, or sold from the leased 
area;
    b. After the sixth year of production, the Convention-related 
royalty payment rate shall increase by one percent for each subsequent 
year until the twelfth year and shall remain at seven percent 
thereafter until lease termination.
    6. If the U.S. becomes a party to the Convention after the fifth 
year of production from the lease, and a lessee is required, as 
provided herein, to pay Convention-related royalty, the amount of the 
royalty due will be based on the above payment schedule as determined 
from first production. For example, U.S. accession to the Convention in 
the tenth year of lease production would result in a Convention-related 
royalty payment of five percent of the value of the tenth year's lease 
production, saved, removed, or sold from the lease. The following year, 
a payment of six percent would be due, and so forth as stated above, up 
to a maximum of seven percent per year.
    7. If, in any production year after the first five years of lease 
production, due to lease royalty suspension provisions or through 
application and approval of relief from royalties, lease production 
royalty is paid but is less than the payment provided for by the 
Convention, then the lessee will be required to pay to the U.S. 
government the Convention-related royalty in the amount of the 
shortfall.
    8. In determining the value of production from the lease if a 
payment of Convention-related royalty is to be made, the provisions of 
the lease and applicable regulations shall apply.
    9. The Convention-related royalty payment(s) required under 
paragraphs 5 through 7 of this stipulation, if any, shall not be paid 
monthly but shall be due and payable to MMS on or before 30 days after 
the expiration of the relevant production lease year.
    10. The lessee will receive royalty credit in the amount of the 
Convention-related royalty payment required under paragraphs 5 through 
7 of this stipulation, which will apply to royalties due under the 
lease for which the Convention-related royalty accrued in subsequent 
periods as non-Convention related royalty payments become due.
    11. Any lease production for which the lessee pays no royalty other 
than a Convention-related requirement, due to lease royalty suspension 
provisions or through application and approval of relief from 
royalties, will count against the lease's applicable royalty suspension 
or relief volume.
    12. The lessee will not be allowed to apply or recoup any unused 
Convention-related credit(s) associated with a lease that has been 
relinquished or terminated.

    Approved: July 13, 2001.
Thomas R. Kitsos,
Acting Director, Minerals Management Service.
    Approved: July 13, 2001.
Piet deWitt,
Acting Assistant Secretary, Land and Minerals Management.
[FR Doc. 01-18399 Filed 7-20-01; 8:45 am]
BILLING CODE 4310-MR-P