[Federal Register Volume 70, Number 36 (Thursday, February 24, 2005)]
[Notices]
[Pages 9099-9104]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-3523]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service


Outer Continental Shelf Beaufort Sea Alaska, Oil and Gas Lease 
Sale 195

AGENCY: Minerals Management Service, Interior.

ACTION: Final Notice of Sale OCS Oil and Gas Lease Sale 195, Beaufort 
Sea

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SUMMARY: The MMS will hold OCS oil and gas lease Sale 195 on March 30, 
2005, in accordance with provisions of the OCS Lands Act (43 U.S.C. 
1331-1356, as amended), the implementing regulations (30 CFR Part 256), 
and the OCS Oil and Gas Leasing Program for 2002-2007.

DATES: Lease Sale 195 is scheduled to be held on March 30, 2005, at the 
Wilda Marston Theatre, Z.J. Loussac Public Library, 3600 Denali Street, 
Anchorage, Alaska. Public reading will begin at 9 a.m. All times 
referred to in this document are local Anchorage, Alaska times, unless 
otherwise specified.

ADDRESSES: A package containing the final Notice of Sale and several 
supporting and essential documents referenced herein are available 
from: Alaska OCS Region, Information Resource Center, Minerals 
Management Service, 3801 Centerpoint Drive, Suite 500, Anchorage, 
Alaska 99503-5823, Telephone: (907) 334-5206 or 1-800-764-2627.
    These documents are also available on the MMS Alaska OCS Region's 
Web site at www.mms.gov/alaska.
    Filing of Bids: Bidders will be required to submit bids to the MMS 
at the Alaska OCS Region Office, 3801 Centerpoint Drive, Fifth Floor, 
Anchorage, Alaska 99503-5823 between the hours of 8 a.m. and 4 p.m. on 
normal business days, prior to the Bid Submission deadline of 10 a.m., 
Tuesday, March 29, 2005. If bids are mailed, the envelope containing 
all of the sealed bids must be marked as follows: Attention: Mr. Fred 
King, Contains Sealed Bids for Sale 195.
    If bids are received later than the time and date specified above, 
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, March 29, 2005. Should an unexpected event such as an 
earthquake or travel restrictions be significantly disruptive to bid 
submission, the Alaska OCS Region may extend the Bid Submission 
Deadline. Bidders may call (907) 334-5200 for information about the 
possible extension of the Bid Submission Deadline due to such an event.


    Note: Four blocks in the easternmost Beaufort Sea area are 
subject to jurisdictional claims by both the United States and 
Canada. This Notice refers to this area as the Disputed Portion of 
the Beaufort Sea. The section on Method of Bidding identifies the 
four blocks and describes the procedures for submitting bids for 
them.


    Area Offered for Leasing: MMS is offering for leasing all whole and 
partial blocks listed in the document ``Blocks Available for Leasing in 
OCS Oil and Gas Lease Sale 195'' included in the FNOS 195 package. All 
of these blocks are shown on the following Official Protraction 
Diagrams (which may be purchased from the Alaska OCS Region):

 NR 05-01, Dease Inlet, revised September 30, 1997
 NR 05-02, Harrison Bay North, revised September 30, 1997
 NR05-03, Teshekpuk, revised September 30, 1997
 NR 05-04, Harrison Bay, revised September 30, 1997
 NR 06-01, Beechey Point North, approved February 1, 1996
 NR 06-03, Beechey Point, revised September 30, 1997
 NR 06-04, Flaxman Island, revised September 30, 1997
 NR 07-03, Barter Island, revised September 30, 1997
 NR 07-05, Demarcation Point, revised September 30, 1997
 NR 07-06, Mackenzie Canyon, revised September 30, 1997

    Official block descriptions are derived from these diagrams; 
however, not all blocks included on a diagram are being offered. To 
ascertain which blocks are being offered and the royalty suspension 
provisions that apply you must refer to the document ``Blocks Available 
for Leasing in OCS Oil and Gas Lease Sale 195.'' The Beaufort Sea OCS 
Oil and Gas Lease Sale 195'' Locator Map is also available to assist in 
locating the blocks relative to the adjacent areas. The Locator Map is 
for use in identifying locations of blocks but is not part of the 
official description of blocks available for lease. Some of the blocks 
may be partially encumbered by an existing lease, or transected by 
administrative lines such as the Federal/state jurisdictional line. 
Partial block descriptions are derived from Supplemental Official OCS 
Block Diagrams and OCS Composite Block Diagrams, which are available 
upon request at the address, phone number, or internet site given 
above.
    Statutes and Regulations: Each lease issued in this lease sale is 
subject to the OCS Lands Act of August 7, 1953, 67 Stat. 462; 43 U.S.C. 
1331 et seq., as amended (92 Stat. 629), hereinafter called ``the 
Act''; all regulations issued pursuant to the Act and in existence upon 
the effective date of the lease; all regulations issued pursuant to the 
statute in the future which provide for the prevention of waste and 
conservation of the natural resources of the OCS and the protection of 
correlative rights therein; and all other applicable statutes and 
regulations.

[[Page 9100]]

    Lease Terms and Conditions: For leases resulting from this sale the 
following terms and conditions apply:
    Initial Period: Ten years.
    Minimum Bonus Bid Amounts: $37.50 per hectare or a fraction thereof 
for all blocks in Zone A and $25 hectare or a fraction thereof for all 
blocks in Zone B. Refer to the final Notice of Sale, Beaufort Sea Sale 
195, March 2005 map and the Summary Table of Minimum Bids, Minimum 
Royalty Rates, and Rental Rates shown below.
    Rental Rates: The lessee shall pay the lessor, on or before the 
first day of each lease year which commences prior to a discovery in 
paying quantities of oil or gas on the leased area, then at the 
expiration of each lease year until the start of royalty-bearing 
production, a rental at the rate shown below in the Summary Table of 
Minimum Bids, Minimum Royalty Rates, and Rental Rates. For the time 
period between discovery in paying quantities until the start of 
royalty-bearing production, the lessee shall pay an annual rental of 
$13 per hectare (or fraction thereof).
    Minimum Royalty Rates: After the start of royalty-bearing 
production, the lessee shall pay the lessor a minimum royalty of $13 
per hectare, to be paid at the expiration of each lease year with 
credit applied for actual royalty paid during the lease year. If actual 
royalty paid exceeds the minimum royalty requirement, then no minimum 
royalty payment is due.
    Royalty Rates: A 12\1/2\ percent royalty rate will apply for all 
blocks.

 Summary Table of Minimum Bids, Minimum Royalty Rates, and Rental Rates
------------------------------------------------------------------------
  Terms (values per hectare or
       fraction thereof)                Zone A              Zone B
------------------------------------------------------------------------
Royalty Rate...................  12\1/2\% fixed       12\1/2\% fixed
Minimum Bonus Bid..............  $37.50               $25.00
Minimum Royalty Rate...........  $13.00               $13.00
Rental Rates:
    Year 1.....................  $7.50                $2.50
    Year 2.....................  $7.50                $3.75
    Year 3.....................  $7.50                $5.00
    Year 4.....................  $7.50                $6.25
    Year 5.....................  $7.50                $7.50
    Year 6.....................  $12.00               $10.00
    Year 7.....................  $17.00               $12.00
    Year 8.....................  $22.00               $15.00
    Year 9.....................  $30.00               $17.00
    Year 10....................  $30.00               $20.00
------------------------------------------------------------------------

    Royalty Suspension Areas: Royalty suspension provisions apply to 
first oil production. Royalty suspensions on the production of oil and 
condensate, prorated by lease acreage and subject to price thresholds, 
will apply to all blocks. Royalty suspension volumes (RSV) are based on 
2 zones, Zone A and Zone B, as depicted on the Map. More specific 
details regarding royalty suspension eligibility, applicable price 
thresholds and implementations are included in the document ``Royalty 
Suspension Provisions, Sale 195'' in the final Notice of Sale 195 
package. Minimum royalty requirements apply during RSV periods. 
Depending on surface area and zone, leases will receive a RSV as 
follows:

------------------------------------------------------------------------
                                                       Zone A    Zone B
                                                       million   million
                      Hectares                         barrels   barrels
                                                         RSV       RSV
------------------------------------------------------------------------
Less than 771.......................................        10        15
771 to less than 1541...............................        20        30
1541 or more........................................        30        45
------------------------------------------------------------------------

    The RSV applies only to liquid hydrocarbon production, i.e., oil 
and condensates. Natural gas volumes that leave the lease are subject 
to original lease-specified royalties. The market value of natural gas 
will be determined by MMS's Minerals Revenue Management (MRM) office. 
The MRM will value the natural gas from Sale 195 based on its potential 
uses and applicable market characteristics at the time the gas is 
produced.
    Debarment and Suspension (Nonprocurement): In accordance with 
regulations pursuant to 43 CFR, part 42, subpart C, the lessee shall 
comply with the U.S. Department of the Interior's nonprocurement 
debarment and suspension requirements and agrees to communicate this 
requirement to comply with these regulations to persons with whom the 
lessee does business as it relates to this lease by including this term 
as a condition to enter into their contracts and other transactions.
    Stipulations and Information To Lessees: The documents entitled 
``Lease Stipulations for Oil and Gas Lease Sale 195'' and ``Information 
to Lessees for Oil and Gas Lease Sale 195'' contain the text of the 
Stipulations and the Information to Lessees that apply to this sale. 
This document is included in the FNOS 195 package.
    Method of Bidding: Procedures for the submission of bids in Sale 
195 are described in paragraph (a) below. Procedures for the submission 
bids for the four blocks in the Disputed Portion of the Beaufort Sea 
will differ as described in paragraph (b) below.
    (a) Submission of Bids. 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 195, not to be opened until 9 a.m., 
Wednesday, March 30, 2005.'' 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 final NOS 195 package.
    (b) Submission of Bids in the Disputed Portion of the Beaufort Sea. 
Procedures for the submission of bids on blocks 6201, 6251, 6301, and 
6361 in Official Protraction Diagram NR 07-06 will differ from 
procedures in paragraph (a) above as follows:
    Separate, signed bids on these blocks must be submitted in sealed 
envelopes labeled only with ``Disputed Portion of the Beaufort Sea,'' 
Company Number, and a sequential bid number for the company submitting 
the bid(s). The envelope thus would be in the following format: 
Disputed Portion of the Beaufort Sea Bid, Company No: 00000, Bid No: 1.
    On or before March 30, 2010, the MMS will determine whether it is 
in the best interest of the United States either to open bids for these 
blocks or to return

[[Page 9101]]

the bids unopened. The MMS will notify bidders at least 30 days before 
bid opening. Bidders on these blocks may withdraw their bids at any 
time after such notice and prior to 10 a.m. of the day before bid 
opening. If the MMS does not give notice by March 30, 2010, the bids 
will be returned unopened. The MMS reserves the right to return these 
bids at any time. The MMS will not disclose which blocks received bids 
or the names of bidders in this area unless the bids are opened.
    The MMS published a list of restricted joint bidders, which applies 
to this sale, in the Federal Register at 69 FR 61402 on October 18, 
2004. 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 (see the document ``Bid Form and Envelope'' contained in the FNOS 
195 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 195. 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, following the detailed instructions contained in the document 
``Instructions for Making EFT Bonus Payments'' included in the final 
NOS 195 package. All payments must be electronically deposited into an 
interest-bearing account in the U.S. Treasury (account specified in the 
EFT instruction) by 1:00 p.m. Eastern Time 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.
    Please 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 one-fifth bonus payment (EFT or otherwise)] will be 
required to guarantee (secure) their one-fifth bonus payment prior to 
the submission of bids. For those who must secure the EFT one-fifth 
bonus payment, one of the following options may be provided: (1) A 
third-party guarantee; (2) an Amended Development Bond Coverage; (3) a 
Letter of Credit; or (4) a lump sum payment in advance via EFT. 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 final NOS Sale 195 
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 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 256, Subpart I.
    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 part 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.
    Jurisdiction: The United States claims exclusive maritime resource 
jurisdiction over the area offered. Canada claims such jurisdiction 
over the four easternmost blocks included in the sale area. These 
blocks are located in Official Protraction Diagram NR 07-06 as block 
numbers 6201, 6251, 6301, and 6351. Nothing in this Notice shall affect 
or prejudice in any manner the position of the United States with 
respect to the nature or extent of the internal waters, the territorial 
sea, the high seas, or sovereign rights or jurisdiction for any purpose 
whatsoever. Bid submission procedures pertaining to blocks in this 
Disputed Portion of the Beaufort Sea are described in paragraph (b) 
under Method of Bidding.
    Notice of Bidding Systems: Section 8(a)(8) (43 U.S.C. 1337(a)(8)) 
of the OCS Lands Act 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 195, Beaufort Sea, 
scheduled to be held on March 30, 2005.
    In Sale 195, 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 million barrels of oil equivalent per 
lease in Zone A of the sale area or with a royalty suspension of up to 
45 million barrels of oil equivalent per lease in Zone B of the sale 
area. The amount of royalty suspension available on each lease is 
dependent on the area of the lease and specified in the Sale Notice. 
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 195 are contained 
in the document ``Royalty Suspension Provisions, Sale 195'' included in 
the FNOS 195 package.


[[Page 9102]]


    Dated: February 16, 2005.
R.M. ``Johnnie'' Burton,
Director, Minerals Management Service.
BILLING CODE 4310-MR-U

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[GRAPHIC] [TIFF OMITTED] TN24FE05.000


[[Page 9104]]


[FR Doc. 05-3523 Filed 2-23-05; 8:45 am]
BILLING CODE 4310-MR-C