[Federal Register Volume 67, Number 6 (Wednesday, January 9, 2002)]
[Proposed Rules]
[Pages 1171-1173]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-521]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Part 250

RIN 1010-AC92


Oil and Gas and Sulphur Operations on the Outer Continental 
Shelf; Suspension of Operations for Exploration Under Salt Sheets

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Proposed rule.

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SUMMARY: MMS proposes to modify regulations that govern suspensions of 
operations for oil and gas leases on the Outer Continental Shelf (OCS). 
There are instances where oil and gas lessees begin timely analysis of 
geophysical data early in the lease term, but the analysis proves 
inconclusive because of problems caused by the existence of salt sheets 
underlying the seabed and overlying possible hydrocarbon deposits. In 
such cases, the proposed rule would allow lessees to apply for a 
suspension of operations (SOO) to complete the necessary geophysical 
analysis before drilling a well. To qualify for a suspension of 
operations, the lessee must show it has made and will continue to make 
substantial efforts and financial commitment to process and reprocess 
its geophysical data.

DATES: MMS will consider all comments received by February 8, 2002. MMS 
may not fully consider comments received after February 8, 2002.

ADDRESSES: You may mail or hand-carry comments (three copies) to the 
Department of the Interior; Minerals Management Service; Mail Stop 
4024; 381 Elden Street; Herndon, Virginia 20170-4817; Attention: Rules 
Processing Team.

FOR FURTHER INFORMATION CONTACT: John Mirabella, Engineering and 
Operations Division, (703) 787-1598.

SUPPLEMENTARY INFORMATION: When a lessee obtains an oil and gas lease 
on the OCS, MMS regulations allow the lessee flexibility to schedule 
activities during the primary term. At the end of the primary term, the 
lease can continue in force only by production, suspension, drilling, 
or well reworking operations as approved by the Secretary. MMS 
regulations authorize suspensions before discovery of oil or gas in 
paying quantities only in limited circumstances. Generally, when a 
lease reaches the end of the primary term, the lessee must conduct 
drilling operations until it has made a discovery of oil or gas and a 
commitment to proceed to development and production.
    Although lessees have made great progress in imaging potential 
objectives in areas under salt sheets, processing, analyzing, and 
interpreting geophysical, geological, and other relevant data and 
information is complex and time-consuming. As a result, lessees have 
been faced with the end-of-lease-term decisions to either allow the 
lease to expire or drill a well without sufficient geophysical 
information.
    On December 21, 2000, MMS issued Notice to Lessees (NTL) 2000-G22, 
Subsalt Lease Term Extension. That NTL provides for extension of lease 
terms for subsalt exploration in cases where the lessee has drilled a 
well on the lease during the primary term but needs additional time to 
process geophysical data before drilling another well. The NTL did not 
provide

[[Page 1172]]

additional time to process geophysical data in cases where a well had 
not been drilled. This rule would authorize MMS to grant a suspension 
for a lease when the operator has conducted timely analysis and 
interpretation of the geophysical data that may ultimately lead to a 
drilling objective but, due to the complexity of the salt sheet, needs 
additional time to complete the geophysical analysis before drilling. 
The provision requires the lessee to conduct timely analysis of 
geophysical information before the lessee may be granted additional 
time because of complications associated with the presence of the salt 
sheet. In considering whether the analysis of geophysical information 
is timely, MMS will require the lessee to have collected and analyzed 
geophysical information (i.e., full 3-D depth migration beneath the 
salt sheet and over the entire lease area) before the end of the third 
lease year and to have completed additional data reprocessing before 
MMS will grant a suspension. MMS finds that this provision will address 
those special circumstances and that appropriate suspensions may lead 
to improved opportunities for effective exploration, development, and 
production.

Procedural Matters

Public Comment Procedure

    Comments on the proposed rule, including names and home addresses 
of respondents, are available for public review during regular business 
hours. Individual respondents may request that we withhold their home 
address or identity from the rulemaking record to the extent allowable 
by law. If you wish us to withhold your name and/or address, you must 
state this prominently at the beginning of your comment. However, we 
will not consider anonymous comments. We will make all comments from 
organizations or businesses, and from individuals identifying 
themselves as representatives or officials of organizations or 
businesses, available for public inspection in their entirety.

Regulatory Planning and Review (Executive Order 12866)

    This document is not a significant rule as determined by the Office 
of Management and Budget (OMB) and is not subject to review under 
Executive Order 12866.
    Over the next 5 years, MMS anticipates that companies would make 3 
to 5 requests each year under the proposed rule. We estimate that in 
three of the cases each year, this new rule will prevent unnecessary 
compelled drilling of wells that may not otherwise have been drilled 
had the geophysical analysis been sufficient. Depending on the water 
depth and the well depth, we estimate that drilling each well, on 
average, would have cost $10 million. Selective suspensions will help 
reduce potential environmental impact and produce approximately $30 
million in private sector savings.
    (1) This rule will not have an effect of $100 million or more on 
the economy. It will not adversely affect in a material way the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities.
    (2) This rule will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency. Issuance 
of a suspension for a lease does not interfere with the ability of 
other agencies to exercise their authority.
    (3) This rule does not alter the budgetary effects of entitlements, 
grants, user fees, or loan programs or the rights or obligations of 
their recipients. This rule will have no effect on the rights of the 
recipients of entitlements, grants, user fees, or loan programs.
    (4) This rule does not raise novel legal or policy issues.

Regulatory Flexibility (RF) Act

    The Department certifies that this rule will not have a significant 
economic effect on a substantial number of small entities under the RF 
Act (5 U.S.C. 601 et seq.).
    This rule may directly or indirectly affect lessees and operators 
of leases on the OCS. This includes about 130 different companies. 
These companies are generally classified under the North American 
Industry Classification System (NAICS) code 211111, which includes 
companies that extract crude petroleum and natural gas. For this NAICS 
code classification, a small company is one with fewer than 500 
employees. Based on these criteria, we estimate that about 70 percent 
of these companies are considered small. We expect few, if any, of the 
small companies to apply for a suspension under this rule. Some small 
companies may be included in partnerships with larger companies that 
are exploring in the subsalt areas.
    Your comments are important. The Small Business and Agriculture 
Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were 
established to receive comments from small business about Federal 
agency enforcement actions. The Ombudsman will annually evaluate the 
enforcement activities and rate each agency's responsiveness to small 
business. If you wish to comment on the enforcement actions of MMS, 
call toll-free (888) 734-3247.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    This rule is not a major rule under the SBREFA (5 U.S.C. 804(2)). 
This rule:
    (a) Does not have an annual effect on the economy of $100 million 
or more.
    (b) Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions.
    (c) Does not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
United States-based enterprises to compete with foreign-based 
enterprises.
    We do not expect this rule to have a significant effect because, as 
discussed above, this rule will have a positive effect on the private 
sector of approximately $30 million per year in avoided costs.

Paperwork Reduction Act (PRA) of 1995

    The PRA provides that an agency may not conduct or sponsor a 
collection of information unless it displays a currently valid OMB 
control number. Until OMB approves a collection of information and 
assigns a control number, you are not required to respond. The proposed 
revisions to 30 CFR part 250, subpart A, refer to, but do not change, 
information collection requirements in current regulations. OMB has 
approved the referenced information collection requirements under OMB 
control numbers 1010-0114, current expiration date of September 30, 
2002. The rule proposes no new reporting or recordkeeping requirements, 
and an OMB form 83-I submission to OMB under the PRA is not required.

Federalism (Executive Order 13132)

    With respect to Executive Order 13132, the rule does not have 
Federalism implications. This rule does not substantially and directly 
affect the relationship between the Federal and State governments. To 
the extent that State and local governments have a role in OCS 
activities, this rule does not affect that role.

Takings (Executive Order 12630)

    With respect to Executive Order 12630, the proposed rule does not 
have significant Takings implications. A Takings Implication Assessment 
is not required. The proposed rulemaking is not a governmental action 
capable of

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interfering with constitutionally protected property rights.

Energy Supply, Distribution, or Use (Executive Order 13211)

    This rule is not a significant rule and is not subject to review by 
OMB under Executive Order 12866. The rule may have a small positive 
effect on energy supplies.

Civil Justice Reform (Executive Order 12988)

    With respect to Executive Order 12988, the Office of the Solicitor 
has determined that this rule does not unduly burden the judicial 
system and meets the requirements of sections 3(a) and 3(b)(2) of the 
Executive Order.

National Environmental Policy Act (NEPA) of 1969

    This rule does not constitute a major Federal action significantly 
affecting the quality of the human environment. The Department of the 
Interior has established that ``issuance and/or modification of 
regulations'' is considered a categorically excluded action as it 
results only in administrative effects causing no significant impacts 
on the environment and, therefore, will not require preparation of an 
environmental assessment or impact statement. MMS has determined that 
this action does not represent an exception to the categorical 
exclusion. A detailed statement under NEPA is not required.

Unfunded Mandate Reform Act (UMRA) of 1995 (Executive Order 12866)

    This rule does not impose an unfunded mandate on State, local, or 
tribal governments or the private sector of more than $100 million per 
year. The rule does not have a significant or unique effect on State, 
local, or tribal governments or the private sector. A statement 
containing the information required by the UMRA (2 U.S.C. 1531 et seq.) 
is not required.

List of Subjects in 30 CFR Part 250

    Continental shelf, Environmental impact statements, Environmental 
protection, Government contracts, Investigations, Mineral royalties, 
Oil and gas development and production, Oil and gas exploration, Oil 
and gas reserves, Penalties, Pipelines, Public lands-mineral resources, 
Public lands--right-of-way, Reporting and recordkeeping requirements, 
Sulphur development and production, Sulphur exploration, Surety bonds.

    Dated: December 21, 2001.
James E. Cason,
Acting Assistant Secretary, Land and Minerals Management.
    For the reasons stated in the preamble, the Minerals Management 
Service (MMS) proposes to amend 30 CFR 250 as follows:

PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER 
CONTINENTAL SHELF

    1. The authority citation for part 250 continues to read as 
follows:

    Authority: 43 U.S.C. 1331, et seq.

    2. In Sec. 250.175, redesignate the existing text as paragraph (a) 
and add a new paragraph (b) to read as follows:


Sec. 250.175  When may the Regional Supervisor grant an SOO?

* * * * *
    (b) The Regional Supervisor may grant an SOO not to exceed 3 years 
in the Western Gulf of Mexico when all of the following conditions are 
met:
    (1) The lease was issued with an initial lease term of 5 years, or 
with an initial term of 8 years with a requirement to drill within 5 
years;
    (2) The lessee has collected and analyzed appropriate geophysical 
information prior to the end of the third lease year;
    (3) The geophysical information confirms the presence of a salt 
sheet as well as evidence that a drillable objective may exist beneath 
the salt sheet;
    (4) The applicant has completed additional reprocessing prior to 
submitting the application for suspension; and
    (5) The applicant demonstrates that additional time is necessary to 
gather new geophysical data or to reprocess or reinterpret existing 
data to further define drilling objectives beneath a salt sheet.

[FR Doc. 02-521 Filed 1-8-02; 8:45 am]
BILLING CODE 4310-MR-P