[Federal Register Volume 69, Number 73 (Thursday, April 15, 2004)]
[Notices]
[Pages 20033-20037]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8518]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service


Outer Continental Shelf (OCS) Cook Inlet Alaska, Oil and Gas 
Lease Sale 191

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Final notice of Sale 191, Cook Inlet.

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SUMMARY: The MMS will hold Sale 191 on May 19, 2004, in accordance with 
provisions of the OCS Lands Act (43 U.S.C. 1331-1356, as amended) and 
the implementing regulations (30 CFR part 256).

DATES: Sale 191 is scheduled to be held on Wednesday, May 19, 2004, at 
the Wilda Marston Theatre, Z. J. Loussac Public Library, 3600 Denali 
Street, Anchorage, Alaska. Public opening and reading will begin at 
approximately 10 a.m. immediately following the planned State of Alaska 
Cook Inlet and Northslope Foothills Areawide Sales at the same 
location. All times referred to in this document are local Anchorage, 
Alaska, times, unless otherwise specified.

ADDRESSES: The ``Notice of Sale Package'' contains detailed information 
essential to potential bidders. Interested parties can obtain the 
package by writing or calling the: Alaska OCS Region, Information 
Resource Center, Minerals Management Service, 949 East 36th Avenue, 
Room 330, Anchorage, Alaska 99508-4302; telephone: (907) 271-6438 or 1-
800-764-2627.
    These documents may be viewed and downloaded from the MMS Web site 
at www.mms.gov/alaska. Please note: This Internet site may be 
temporarily unavailable; if so, please contact the Information Resource 
Center at the address and phone number above regarding the potential 
restoration of this site or the availability of a temporary alternative 
site.
    Filing of Bids: Bidders will be required to submit bids to MMS at 
the Alaska OCS Region Office, 949 East 36th Avenue, Third Floor, 
Anchorage, Alaska 99508 by 10 a.m. on the day before the sale, Tuesday, 
May 18, 2004. If bids are mailed, the envelope containing all of the 
sealed bids must be marked as follows: ``Attention: Mr. Tom Warren, 
Contains Sealed Bids for Sale 191.'' If bids are received later than 
the time and date specified, they will be returned unopened to the 
bidders. Bidders may not modify or withdraw their bids unless the 
Regional Director, Alaska OCS Region, receives a written modification 
or written withdrawal request prior to 10 a.m., Tuesday, May 18, 2004.
    Proposed Sale Area: The MMS is offering for bid in this sale all of 
the unleased acreage in the area of Cook Inlet identified on the map 
included as part of this notice. A detailed listing of the blocks and 
hectares can be obtained by request at the address given above or on 
the MMS Web site above.
    Lease Terms and Conditions: For leases resulting from this sale the 
following terms and conditions apply:
    Initial Period: Eight years.
    Minimum Bonus Bid Amount: $25 per hectare or fraction thereof for 
all blocks.
    Rental: $5 per hectare or fraction thereof, to be paid on or before 
the first

[[Page 20034]]

day of each lease year until a discovery of oil or gas, then at the 
rate of $13 per hectare or fraction thereof payable on or before the 
last day of each lease year in any full lease year in which royalties 
on production are not due. This provision is applicable to all leases 
included in an approved unit where one or more of the unitized leases 
has a discovery.
    Royalty Rates: A 12\1/2\ percent royalty rate will apply for all 
blocks.
    Minimum Royalty: $13 per hectare or fraction thereof per year, to 
be paid at the expiration of each lease year which commences after oil 
and gas is produced and on which royalties are due. If the actual 
royalty paid in a lease year exceeds the minimum royalty requirement, 
then no minimum royalty payment is due. In those lease years in which 
the actual royalty is less than the prescribed minimum royalty, the 
difference between the prescribed minimum royalty ($13 per hectare per 
year) and actual royalty must be paid.
    Royalty Suspension Areas: A royalty suspension volume (RSV) of 30 
million barrels of oil equivalent (30 MMBOE) will apply to first oil 
and gas production from each lease. Oil and gas production are combined 
in the RSV allowance. Gas RSV is calculated on a volume basis (30 MMbbl 
= 168.6 Bcf). Royalty suspensions for oil are subject to price 
thresholds which apply to all leases. The following price thresholds 
(both floor and ceiling) apply to production for each lease issued. 
Price thresholds do not apply to gas. The price thresholds have been 
revised from the proposed NOS to be consistent with both current and 
expected future market oil prices. The price thresholds are:

------------------------------------------------------------------------
                                             Price thresholds
                                 ---------------------------------------
             Product                  Floor (not        Ceiling--2004$
                                     adjusted for        (adjusted for
                                      inflation)          inflation)
------------------------------------------------------------------------
Oil (per bbl)...................  $21.00............  $39.00
Gas (per MMbtu).................  Not Applicable....  Not Applicable
------------------------------------------------------------------------

    The RSV is discussed in more detail in the Leasing Activities 
Information document titled ``Royalty Suspension Provisions for Oil and 
Gas Production Cook Inlet Oil and Gas Lease Sale 191'' included in the 
Notice of Sale Package. This document provides specific details 
regarding royalty suspension eligibility, price thresholds (floors and 
ceilings) and implementation.
    Stipulations and Information to Lessees: The document entitled 
``Lease Stipulations and Information to Lessees for Oil and Gas Lease 
Sale 191'' contains the text of the Stipulations and the Information to 
Lessees that apply to this sale. This document is included in the 
Notice of Sale 191 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 191, not to be opened until 10 a.m., Wednesday, May 
19, 2004.'' The total amount of the bid must be in whole dollars; any 
cent amount above the whole dollar will be ignored by 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 
Notice of Sale Package.
    The MMS published a list of restricted joint bidders, which applies 
to this sale, in the Federal Register at 68 FR 58705 on October 10, 
2003. 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 
must execute all documents in conformance with signatory authorizations 
on file in the Alaska OCS Region. Partnerships also must submit or have 
on file a list of signatories authorized to bind the partnership. 
Bidders are advised that 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 one-fifth bonus bid amount 
on all high bids. A statement to this effect must be included on each 
bid as specified in the document ``Bid Form and Envelope'' contained in 
the Notice of Sale Package.
    Bonus Bid Deposit: Each bidder submitting an apparent high bid must 
submit a bonus bid deposit to MMS equal to one-fifth of the bonus bid 
amount for each such bid submitted for Sale 191. Under the authority 
granted by 30 CFR 256.46(b), MMS requires bidders to use electronic 
funds transfer (EFT) procedures for payment of the one-fifth bonus bid 
deposits. Such payment will be due by 1 p.m. eastern time on the day 
following bid reading. Such a deposit does not constitute and shall not 
be construed as acceptance of any bid on behalf of the United States. 
If a lease is awarded, MMS requests that only one transaction be used 
for payment of the four-fifths bonus bid amount and the first year's 
rental.
    In addition, 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 one-fifth bonus payment (EFT or otherwise)) will be 
required to guarantee (secure) their one-fifth bonus payment prior to 
the submission of bids. The detailed bid deposit EFT procedures, 
including options for those submitters required to secure the EFT one-
fifth bonus bid amount, are specified under ``Instructions for Making 
EFT Bonus Payments'' in the Notice of Sale 191 Package.
    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 Notice of Sale 191 
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. The Attorney General of the United States may also 
review the results of the lease sale prior to the acceptance of bids 
and issuance of leases. 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 Regional Director 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.
    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

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1986) as amended), pay by EFT the balance of the bonus bid amount and 
the first year's rental for each lease issued in accordance with the 
requirements of 30 CFR 218.155, and satisfy the bonding requirements of 
30 CFR part 256, subpart I. Each bidder who is a successful high bidder 
must have on file in the Alaska OCS Region a currently valid 
certification (Debarment Certification Form) certifying that the bidder 
is not excluded from participation in primary covered transactions 
under Federal non-procurement programs and activities. A certification 
previously provided to that office remains currently valid until new or 
revised information applicable to that certification become available. 
In the event of new or revised applicable information, MMS will require 
a subsequent certification before lease issuance can occur. Persons 
submitting such certification should review the requirements of 43 CFR 
part 12, subpart D. A copy of the Debarment Certification Form is 
contained in the Notice of Sale Package.
    Affirmative Action: The MMS requests that, prior to bidding, Equal 
Opportunity Affirmative Action Representation Form MMS 2032 (June 1985) 
and Equal Opportunity Compliance Report Certification Form MMS 2033 
(June 1985) be on file in the Alaska OCS Region. This certification is 
required by 41 CFR 60 and Executive Order No. 11246 of September 24, 
1965, as amended by Executive Order No. 11375 of October 13, 1967. In 
any event, prior to the execution of any lease contract, both forms are 
required to be on file in the Alaska OCS Region.
    Notice of Bidding Systems: Section 8(a)(8) of the OCS Lands Act (43 
U.S.C. 1337(a)(8)) requires that, at least 30 days before any lease 
sale, a notice be submitted to Congress and published in the Federal 
Register. This Notice of Bidding Systems is for Sale 191, Cook Inlet, 
scheduled to be held on May 19, 2004.
    In Sale 191, all blocks are being offered under a bidding system 
that uses a cash bonus and a fixed royalty of 12\1/2\ percent with a 
royalty suspension of up to 30 MMBOE. Oil and gas would be combined in 
determining the use of the RSV. This bidding system is authorized under 
30 CFR 260.110(a)(7), which allows use of a cash bonus bid with a 
royalty rate of not less than 12\1/2\ percent and with suspension of 
royalties for a period, volume, or value of production, and an annual 
rental. Analysis performed by MMS indicates that use of this system 
provides an incentive for development of this area while ensuring that 
a fair sharing of revenues will result if major discoveries are made 
and produced.
    Specific royalty suspension provisions for Sale 191 are contained 
in the document ``Royalty Suspension Provisions for Oil and Gas 
Production Cook Inlet Oil and Gas Lease Sale 191'' included in the 
Notice of Sale Package.

    Dated: April 7, 2004.
R.M. ``Johnnie'' Burton,
Director, Minerals Management Service.
BILLING CODE 4310-MR-P

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[GRAPHIC] [TIFF OMITTED] TN15AP04.403



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[FR Doc. 04-8518 Filed 4-14-04; 8:45 am]
BILLING CODE 4310-MR-C