[Federal Register Volume 73, Number 30 (Wednesday, February 13, 2008)]
[Notices]
[Pages 8347-8353]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-2684]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service


Outer Continental Shelf (OCS) Central Gulf of Mexico (GOM) 
Planning Area Oil and Gas Lease Sale 206

AGENCY: Minerals Management Service, Interior.

ACTION: Final Notice of Sale (FNOS) 206.

-----------------------------------------------------------------------

SUMMARY: On March 19, 2008, the MMS will open and publicly announce 
bids received for blocks offered in Central GOM Planning Area Oil and 
Gas Lease Sale 206, pursuant to the OCS Lands Act (43 U.S.C. 1331-1356, 
as amended) and the regulations issued thereunder (30 CFR Part 256). 
The Final Notice of Sale 206 Package (FNOS 206 Package) contains 
information essential to bidders, and bidders are charged with the 
knowledge of the documents contained in the Package.

DATES: Public bid reading for the Central GOM Planning Area Oil and Gas 
Lease Sale 206 will begin at 9 a.m., Wednesday, March 19, 2008, at the 
Louisiana Superdome, 1500 Sugarbowl Drive, New Orleans, Louisiana 
70112. The lease sale will be held in the St. Charles Club Room on the 
second floor (Loge Level). Entry to the Superdome will be on the 
Poydras Street side of the building through Gate A on the Ground or 
Plaza Level, and parking should be available at Garage 6. All times 
referred to in this document are local New Orleans times, unless 
otherwise specified.

ADDRESSES: Bidders can obtain a FNOS 206 Package containing this Notice 
of Sale and several supporting and essential documents referenced 
herein from the MMS Gulf of Mexico Region Public Information Unit, 1201 
Elmwood Park Boulevard, New Orleans, Louisiana 70123-2394, (504) 736-
2519 or (800) 200-GULF, or via the MMS Internet Web site at http://www.gomr.mms.gov.
    Filing of Bids: Bidders must submit sealed bids to the Regional 
Director (RD), MMS Gulf of Mexico Region, 1201 Elmwood Park Boulevard, 
New Orleans, Louisiana 70123-2394, between 8 a.m. and 4 p.m. on normal 
working days, and from 8 a.m. to the Bid Submission Deadline of 10 a.m. 
on Tuesday, March 18, 2008. If bids are mailed, please address the 
envelope containing all of the sealed bids as follows:
    Attention: Supervisor, Sales and Support Unit (MS 5422), Leasing 
Activities Section, MMS Gulf of Mexico Region, 1201 Elmwood Park 
Boulevard, New Orleans, Louisiana 70123-2394. Contains Sealed Bids for 
Oil and Gas Lease Sale 206. Please Deliver to Ms. Nancy Kornrumpf, 6th 
Floor, Immediately.
    Please note: Bidders mailing their bid(s) are advised to call Ms. 
Nancy Kornrumpf, (504) 736-2726, immediately after putting their bid(s) 
in the mail.
    If the RD receives bids later than the time and date specified 
above, he will return those 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. on Tuesday, 
March 18, 2008. Should an unexpected event such as flooding or travel 
restrictions be significantly disruptive to bid submission, the MMS 
Gulf of Mexico Region 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 in the document ``Blocks Available for 
Leasing in Central GOM Planning Area Oil and Gas Lease Sale 206'' 
included in the FNOS 206 Package. All of these blocks are shown

[[Page 8348]]

on the following leasing maps and Official Protraction Diagrams (OPDs):

Outer Continental Shelf Leasing Maps--Louisiana Map Numbers 1 Through 12
                  ([These 30 maps sell for $2.00 each])
------------------------------------------------------------------------
 
------------------------------------------------------------------------
LA1                                West Cameron Area (Revised November
                                    1, 2000).
LA1A                               West Cameron Area, West Addition
                                    (Revised February 28, 2007).
LA1B                               West Cameron Area, South Addition
                                    (Revised February 28, 2007).
LA2                                East Cameron Area (Revised November
                                    1, 2000).
LA2A                               East Cameron Area, South Addition
                                    (Revised November 1, 2000).
LA3                                Vermilion Area (Revised November 1,
                                    2000).
LA3A                               South Marsh Island Area (Revised
                                    November 1, 2000).
LA3B                               Vermilion Area, South Addition
                                    (Revised November 1, 2000).
LA3C                               South Marsh Island Area, South
                                    Addition (Revised November 1, 2000).
LA3D                               South Marsh Island Area, North
                                    Addition (Revised November 1, 2000).
LA4                                Eugene Island Area (Revised November
                                    1, 2000).
LA4A                               Eugene Island Area, South Addition
                                    (Revised November 1, 2000).
LA5                                Ship Shoal Area (Revised November 1,
                                    2000).
LA5A                               Ship Shoal Area, South Addition
                                    (Revised November 1, 2000).
LA6                                South Timbalier Area (Revised
                                    November 1, 2000).
LA6A                               South Timbalier Area, South Addition
                                    (Revised November 1, 2000).
LA6B                               South Pelto Area (Revised November 1,
                                    2000).
LA6C                               Bay Marchand Area (Revised November
                                    1, 2000).
LA7                                Grand Isle Area (Revised November 1,
                                    2000).
LA7A                               Grand Isle Area, South Addition
                                    (Revised February 17, 2004).
LA8                                West Delta Area (Revised November 1,
                                    2000).
LA8A                               West Delta Area, South Addition
                                    (Revised November 1, 2000).
LA9                                South Pass Area (Revised November 1,
                                    2000).
LA9A                               South Pass Area, South and East
                                    Additions (Revised November 1,
                                    2000).
LA10                               Main Pass Area (Revised November 1,
                                    2000).
LA10A                              Main Pass Area, South and East
                                    Additions (Revised November 1,
                                    2000).
LA10B                              Breton Sound Area (Revised November
                                    1, 2000).
LA11                               Chandeleur Area (Revised November 1,
                                    2000).
LA11A                              Chandeleur Area, East Addition
                                    (Revised November 1, 2000).
LA12                               Sabine Pass Area (Revised February
                                    28, 2007).
------------------------------------------------------------------------


          Outer Continental Shelf Official Protraction Diagrams
                ([These 19 diagrams sell for $2.00 each])
------------------------------------------------------------------------
 
------------------------------------------------------------------------
NG15-02                            Garden Banks (Revised February 28,
                                    2007).
NG15-03                            Green Canyon (Revised November 1,
                                    2000).
NG15-05                            Keathley Canyon (Revised February 28,
                                    2007).
NG15-06                            Walker Ridge (Revised November 1,
                                    2000).
NG15-08                            Sigsbee Escarpment (Revised February
                                    28, 2007).
NG15-09                            Amery Terrace (Revised October 25,
                                    2000).
NG16-01                            Atwater Valley (Revised November 1,
                                    2000).
NG16-02                            Lloyd Ridge (Revised February 28,
                                    2007).
NG16-04                            Lund (Revised November 1, 2000).
NG16-05                            Henderson (Revised February 28,
                                    2007).
NG16-07                            Lund South (Revised November 1,
                                    2000).
NG16-08                            Florida Plain (Revised February 28,
                                    2007).
NH15-12                            Ewing Bank (Revised November 1,
                                    2000).
NH16-04                            Mobile (Revised November 1, 2000).
NH16-05                            Pensacola (Revised February 28,
                                    2007).
NH16-07                            Viosca Knoll (Revised November 1,
                                    2000).
NH16-08                            Destin Dome (Revised February 28,
                                    2007).
NH16-10                            Mississippi Canyon (Revised November
                                    1, 2000).
NH16-11                            De Soto Canyon (Revised February 28,
                                    2007).
------------------------------------------------------------------------

    Please note: A CD-ROM (in ARC/INFO and Acrobat (.PDF) format) 
containing all of the GOM leasing maps and OPD's, except for those not 
yet converted to digital format, is available from the MMS Gulf of 
Mexico Region Public Information Unit for a price of $15. For the 
current status of all Central GOM Planning Area leasing maps and OPD's, 
please refer to 66 FR 28002 (published May 21, 2001), 69 FR 23211 
(published April 28, 2004), 72 FR 27590 (published May 16, 2007), and 
72 FR 35720 (published June 29, 2007). In addition, Supplemental 
Official OCS Block Diagrams (SOBD's) are available for blocks which 
contain the ``U.S. 200 Nautical Mile Limit'' line and the ``U.S.-
Mexico-Maritime Boundary'' line. These SOBD's are also available from 
the MMS Gulf of Mexico Region Public Information Unit. For additional 
information, please call Ms. Tara Montgomery, (504) 736-5722.
    All blocks are shown on these leasing maps and OPD's. The available 
Federal acreage of all whole and partial blocks in this lease sale is 
shown in the document ``List of Blocks Available for Leasing in Lease 
Sale 206'' included in the FNOS 206 Package. Some of these blocks may 
be partially leased or deferred, or transected by administrative lines 
such as the Federal/State jurisdictional line. A bid on a block must 
include all of the available Federal acreage of that block. Also, 
information on the unleased portions of such blocks is found in the 
document ``Central Gulf of Mexico Planning Area Lease Sale 206--
Unleased Split Blocks and Available Unleased Acreage of Blocks with 
Aliquots and Irregular Portions Under Lease or Deferred'' included in 
the FNOS 206 Package.
    Areas Not Available for Leasing: The following whole and partial 
blocks are not offered for lease in this lease sale:
    Blocks currently under appeal (although currently unleased, the 
following blocks are under appeal and bids will not be accepted):
    Mississippi Canyon (OPD NH16-10) Block 943.
    West Delta Area (Leasing Map LA8) Block 50.
    Whole blocks and portions of blocks which lie within the former 
Western Gap portion of the 1.4 nautical mile buffer zone north of the 
continental shelf boundary between the United States and Mexico:
    Amery Terrace (OPD NG 15-09).
    Whole Blocks: 280, 281, 318 through 320, and 355 through 359.
    Portions of Blocks: 235 through 238, 273 through 279, and 309 
through 317.
    Sigsbee Escarpment (OPD NG 15-08)
    Whole Blocks: 239, 284, 331 through 341.
    Portions of Blocks: 151, 195, 196, 240, 241, 285 through 298, 342 
through 349. Whole blocks which are beyond the United States Exclusive 
Economic Zone in the area known as the Northern portion of the Eastern 
Gap:
    Lund South (OPD NG 16-07)
    Blocks: 172, 173, 213 through 217, 253 through 261, 296 through 
305, and 349.
    Henderson (OPD NG 16-05)
    Blocks: 467, 510, 511, 553 through 555, 595 through 599, 638 
through 643, 681 through 688, 723 through 732, 766 through 776, 808 
through 820, 851 through 863, 893 through 906, 935 through 949, and 977 
through 993.

[[Page 8349]]

    Florida Plain (OPD NG 16-08)
    Blocks: 7 through 24, 49 through 67, 90 through 110, 133 through 
154, 177 through 197, 221 through 240, 265 through 283, 309 through 
327, and 363 through 370.
    Blocks that were previously included in the Eastern GOM Planning 
Area and are within 100 miles of the Florida coast:
    Pensacola (OPD NH 16-05)
    Blocks: 751 through 754, 793 through 798, 837 through 842, 881 
through 886, 925 through 930, 969 through 975.
    Destin Dome (OPD NH 16-08)
    Blocks: 1 through 7, 45 through 51, 89 through 96, 133 through 140, 
177 through 184, 221 through 228, 265 through 273, 309 through 317, 353 
through 361, 397 through 405, 441 through 450, 485 through 494, 529 
through 538, 573 through 582, 617 through 627, 661 through 671, 705 
through 715, 749 through 759, 793 through 804, 837 through 848, 881 
through 892, 925 through 936, and 969 through 981.
    DeSoto Canyon (OPD NH 16-11)
    Whole Blocks: 1 through 16, 45 through 60, and 92 through 102.
    Portions of Blocks: 89 through 91, 103, 104, and 135 through 147.
    Blocks outside the original Sale 181 area that were previously 
included in the Eastern GOM Planning Area and are beyond 100 miles of 
the Florida coast, which are under the 1998 Presidential moratorium 
until 2012:
    DeSoto Canyon (OPD NH 16-11)
    Whole Blocks: 148, and 185 through 193.
    Portions of Blocks: 103, 104, and 141 through 147.
    Blocks east of the Military Mission Line (i.e. the north-south line 
at 86[deg]41'W. longitude), and north of the northern portion of the 
Eastern Gap, and west of the Central and Eastern Planning Area 
Boundary:
    Henderson (OPD NG 16-05)
    Portions of Blocks: 246, 290, 334, 378, 422, and 466.
    Blocks that are south of the Sale 181 area, as approved in the 
Final Outer Continental Shelf Oil and Gas Leasing Program for 1997-
2002, and north of the previously noted Northern portion of the Eastern 
Gap and west of the Military Mission Line:
    Lloyd Ridge (OPD NG 16-02)
    Blocks: 529 through 550, 573 through 595, 617 through 639, 661 
through 683, 705 through 727, 749 through 771, 793 through 816, 837 
through 860, 881 through 904, 925 through 948, and 969 through 992.
    Henderson (OPD NG 16-05)
    Whole Blocks: 1 through 25, 45 through 69, 89 through 113, 133 
through 157, 177 through 201, 221 through 245, 265 through 289, 309 
through 333, 353 through 377, 397 through 421, 441 through 465, 485 
through 509, 529 through 552, 573 through 594, 617 through 637, 661 
through 680, 705 through 722, 749 through 765, 793 through 807, 837 
through 850, 881 through 892, 925 through 934, and 969 through 976.
    Portions of Blocks: 246, 290, 334, 378, 422, and 466.
    Florida Plain (OPD NG 16-08)
    Blocks 1 through 6, 45 through 48, and 89.
    Statutes and Regulations: Each lease issued in this lease sale is 
subject to the OCS Lands Act of August 7, 1953; 43 U.S.C. 1331 et seq., 
as amended, 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.
    Lease Terms and Conditions: Initial periods, extensions of initial 
periods, minimum bonus bid amounts, rental rates, escalating rental 
rates for leases with an approved extension of the initial 5-year 
period, royalty rate, minimum royalty, and royalty suspension 
provisions, if any, applicable to this sale are noted below. Depictions 
of related areas are shown on the map ``Lease Terms and Economic 
Conditions, Lease Sale 206, Final'' for leases resulting from this 
lease sale.
    Initial Periods: 5 years for blocks in water depths of less than 
400 meters; 8 years for blocks in water depths of 400 to less than 800 
meters (pursuant to 30 CFR 256.37, commencement of an exploratory well 
is required within the first 5 years of the initial 8-year term to 
avoid lease cancellation); and 10 years for blocks in water depths of 
800 meters or deeper.
    Extensions of Initial Periods: The 5-year initial term for a lease 
issued from this sale may be extended to 8 years if a well, targeting 
hydrocarbons below 25,000 feet true vertical depth subsea (TVD SS), is 
spudded within the first 5 years of the initial period. The 3-year 
extension may be granted in cases where the well is drilled to a target 
below 25,000 feet TVD SS and also in cases where the well does not 
reach a depth below 25,000 feet TVD SS due to mechanical or safety 
reasons.
    In order for the lease term to be extended to 8 years, the lessee 
is required to submit to the Regional Supervisor for Production and 
Development, within 30 days after completion of the drilling operation, 
a letter providing the well number, spud date, information 
demonstrating the target below 25,000 feet TVD SS, and, if applicable, 
any safety or mechanical problems encountered that prevented the well 
from reaching a depth below 25,000 feet TVD SS. The Regional Supervisor 
must concur in writing that the conditions have been met to extend the 
lease term 3 years. The Regional Supervisor will provide written 
confirmation of any lease extension within 30 days of receipt of the 
letter provided.
    For any lease that has a well spudded in the first 5 years of the 
initial period with a hydrocarbon target below 25,000 feet TVD SS, the 
regulations found at 30 CFR 250.175(a), (b), and (c) will not be 
applicable at the end of the 5th year.
    For any lease that does not have a well spudded in the first 5 
years of the initial period which targets hydrocarbons below 25,000 
feet TVD SS, the regulations found at 30 CFR 250.175(a), (b), and (c) 
will be applicable, but the 3-year extension will not be available.
    At the end of the 8th year, the lessee is free to use all lease-
term extension provisions under the regulations.
    Minimum Bonus Bid Amounts: A bonus bid will not be considered for 
acceptance unless it provides for a cash bonus in the amount of $25 or 
more per acre or fraction thereof for blocks in water depths of less 
than 400 meters, or $37.50 or more per acre or fraction thereof for 
blocks in water depths of 400 meters or deeper; to confirm the exact 
calculation of the minimum bonus bid amount for each block, see ``List 
of Blocks Available for Leasing'' which is contained in the FNOS 206 
Package. Please note that bonus bids must be in whole dollar amounts 
(i.e., any cents will be disregarded by the MMS).
    Rental Rates: $6.25 per acre or fraction thereof for blocks in 
water depths of less than 200 meters,* and $9.50 per acre or fraction 
thereof for blocks in water depths of 200 meters or deeper,* to be paid 
on or before the 1st day of each lease year until determination of well 
producibility is made, then at the expiration of each lease year until 
the start of royalty-bearing production.
     An exception to the rental rate requirement for blocks in 
water depths up to 400 meters will be escalating rental rates in the 
6th, 7th, and 8th years for leases with an approved extension of the 
initial 5-year period, as noted in the following paragraph of this 
document.

[[Page 8350]]

    Escalating rental rates for leases with an approved extension of 
the initial 5-year period: Any lease granted a 3-year extension beyond 
the initial 5-year period will pay an escalating rental rate as set out 
in the following table, to be paid on or before the 1st day of each 
lease year until determination of well producibility is made, then at 
the expiration of each lease year until the start of royalty-bearing 
production:

------------------------------------------------------------------------
                     Escalating annual rental   Escalating annual rental
  Extended lease    rate [dagger] for a lease  rate [dagger] for a lease
     year No.        in less than a 200-meter  in a 200-to less than 400-
                           water depth             meter water depth
------------------------------------------------------------------------
6                   $12.50 per acre or         $19.00 per acre or
                     fraction thereof.          fraction thereof.
7                   $18.75 per acre or         $28.50 per acre or
                     fraction thereof.          fraction thereof.
8                   $25.00 per acre or         $38.00 per acre or
                     fraction thereof.          fraction thereof.
------------------------------------------------------------------------
 [dagger] If another well is spudded during the 3-year extended term of
  the lease that targets hydrocarbons below 25,000 feet TVD SS, and MMS
  concurs that this has occurred, the rental rate will remain fixed at
  the rental rate in effect during the lease year in which the well was
  spudded.

    Royalty Rate: 18\3/4\ percent royalty rate for blocks in all water 
depths, except during periods of royalty suspension, to be paid monthly 
on the last day of the month following the month during which the 
production is obtained.
    Minimum Royalty: After the start of royalty-bearing production, 
regardless of the year of the lease and notwithstanding any royalty 
suspension that may apply: $6.25 per acre or fraction thereof per year 
for blocks in water depths of less than 200 meters and $9.50 per acre 
or fraction thereof per year for blocks in water depths of 200 meters 
or deeper, 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 Suspension Provisions: Leases with royalty suspension 
volumes (RSVs) are authorized under existing MMS rules at 30 CFR Part 
260. There are no circumstances under which a single lease could 
receive a royalty suspension both for deep gas production and for 
deepwater production.
    Section 344 of the Energy Policy Act of 2005 (EPAct05) extends 
existing deep gas incentives in two ways. First, it mandates an RSV of 
at least 35 billion cubic feet of natural gas for certain wells 
completed in a drilling depth category (greater than 20,000 feet 
subsea) for leases in 0-400 meters of water. Second, section 344 
directs that the same incentives prescribed in MMS's 2004 rule for 
wells completed between 15,000 feet and 20,000 feet TVD SS on leases in 
0-200 meters of water be applied to leases in 200-400 meters of water. 
Section 345 of the EPAct05 directs continuation of the MMS deepwater 
incentive program utilized since 2001 in the Gulf of Mexico for leases 
issued between August 8, 2005, and August 8, 2010, and provides for an 
increase in RSV from 12 million barrels of oil equivalent (MMBOE) to 16 
MMBOE for leases in water depths greater than 2,000 meters.

Deep Gas Royalty Suspensions

    A lease issued as a result of this sale may be eligible for royalty 
relief. The MMS published a proposed rule on May 18, 2007, and will 
publish a final rule implementing section 344 (Incentives for Natural 
Gas Production from Deep Wells in the Shallow Waters of the Gulf of 
Mexico) of EPAct05. Royalty relief under section 344 of EPAct05 applies 
to all blocks in this sale west of 87.5[deg] W. longitude. The same 
terms will be applied to all blocks in this sale east of 87.5[deg] W. 
longitude in order to be consistent for all blocks within this Planning 
Area. If a lease is eligible, it will be subject to the provisions of 
that final rule, including any price threshold provisions. Please refer 
to the Royalty Suspension Provisions cited below.
    A. The following Royalty Suspension Provisions apply to qualifying 
deep wells on leases, at least partly, in water depths up to 200 
meters:
    Such wells require a perforated interval the top of which is from 
15,000 to less than 20,000 feet TVD SS. Suspension volumes, conditions, 
and requirements prescribed in 30 CFR 203.41 through 203.47 and any 
amendments or successor regulations apply to deep gas production from a 
lease in this water depth range issued as a result of this sale. 
Definitions that apply to this category of royalty relief are found in 
30 CFR 203.0. To receive this category of royalty relief, production 
from a qualified well or drilling of a certified unsuccessful well must 
commence before May 3, 2009.
    B. The following Royalty Suspension Provisions apply to qualifying 
deep wells on leases entirely in water depths more than 200 but less 
than 400 meters:
    Such wells require a perforated interval the top of which is from 
15,000 to less than 20,000 feet TVD SS. The EPAct05 requires the 
Secretary to issue regulations granting RSVs to leases entirely in 
water depths more than 200 but less than 400 meters that will be 
calculated using the same methodology as is currently employed for 
leases at least partly in water depths up to 200 meters. Deep wells on 
leases in the 200-to 400-meter water depth range issued in Sale 206 
will be eligible for royalty relief prescribed in the final rule 
implementing section 344 of the EPAct05.
    C. The following Royalty Suspension Provisions apply to qualifying 
ultra-deep wells on leases entirely in water depths less than 400 
meters:
    Ultra-deep wells (i.e., wells completed with a perforated interval 
the top of which is 20,000 feet TVD SS or deeper) on leases entirely in 
water depths less than 400 meters issued in Sale 206 will be eligible 
for royalty relief prescribed in the final rule implementing section 
344 of the EPAct05.

Deepwater Royalty Suspensions

    The following Royalty Suspension Provisions apply to deepwater oil 
and gas production:
    A lease issued as a result of this sale may be eligible for royalty 
relief. Royalty relief under section 345 of EPAct05 (Royalty Relief for 
Deepwater Production) applies to all blocks in this sale west of 
87.5[deg] W. longitude. The same terms will be applied to all blocks in 
this sale east of 87.5[deg] W. longitude in order to be consistent for 
all blocks within this Planning Area. The following Royalty Suspension 
Provisions for deepwater oil and gas production apply to a lease issued 
as a result of this sale. These provisions are similar to, and mean the 
same as, the language used in recent sales except for some clarifying 
text and updated examples. In addition to these provisions and the 
EPAct05, refer to 30 CFR 218.151 and applicable provisions of sections 
260.120-260.124 for regulations on how royalty suspensions relate to 
field assignment, product types, rental obligations, and supplemental 
royalty relief.
    1. A lease in water depths of 400 meters or more will receive a 
royalty suspension as follows, according to the water depth range in 
which the lease is located:
    400 meters to less than 800 meters: 5 MMBOE.
    800 meters to less than 1,600 meters: 9 MMBOE.
    1,600 meters to 2,000 meters: 12 MMBOE.
    Greater than 2,000 meters: 16 MMBOE.
    2. In any calendar year during which the arithmetic average of the 
daily

[[Page 8351]]

closing prices for the nearby delivery month on the New York Mercantile 
Exchange (NYMEX) for the applicable product exceeds the adjusted 
product price threshold, the lessee must pay royalty on production that 
would otherwise receive royalty relief under 30 CFR Part 260 or 
supplemental relief under 30 CFR Part 203, and such production will 
count towards the RSV.
    (a) The base level price threshold for light sweet crude oil is set 
at $35.75 per barrel in 2006. The adjusted oil price threshold in any 
subsequent calendar year is computed by changing the price threshold 
applicable in the immediately preceding calendar year by the percentage 
by which the implicit price deflator for the gross domestic product has 
changed during the calendar year.
    (b) The base level price threshold for natural gas is set at $4.47 
per million British thermal units (MMBTU) in 2006. The adjusted gas 
price threshold in any subsequent calendar year is computed by changing 
the price threshold applicable in the immediately preceding calendar 
year by the percentage by which the implicit price deflator for the 
gross domestic product has changed during the calendar year.
    (c) As an example, if the implicit price deflator indicates that 
inflation is 2.5 percent in 2007 and 2 percent in 2008, then the price 
threshold in calendar year 2008 would become $37.37 per barrel for oil 
and $4.67 for gas. Therefore, royalty on oil production in calendar 
year 2008 would be due if the average of the daily closing prices for 
the nearby delivery month on the NYMEX in 2008 exceeds $37.37 per 
barrel, and royalty on gas production in calendar year 2008 would be 
due if the average of the daily closing prices for the nearby delivery 
month on the NYMEX in 2008 exceeds $4.67 per MMBTU.
    (d) The MMS plans to provide notice in March of each year when 
adjusted price thresholds for the preceding year were exceeded. Once 
this determination is made, based on the then-most-recent implicit 
price deflator information, it will not be revised regardless of any 
subsequent adjustments in the implicit price deflator published by the 
U.S. Government for the preceding year. Information on price thresholds 
is available at the MMS Web site http://www.mms.gov/econ.
    (e) In cases where the actual average price for the product exceeds 
the adjusted price threshold in any calendar year, royalties must be 
paid no later than 90 days after the end of the year (see 30 CFR 
260.122 (b)(2) for more detail), and royalties must be paid 
provisionally in the following calendar year (See 30 CFR 260.122 (c) 
for more detail).
    (f) Full royalties are owed on all production from a lease after 
the RSV is exhausted, beginning on the first day of the month following 
the month in which the RSV is exhausted.
    Lease Stipulations: The map ``Stipulations and Deferred Blocks, 
Lease Sale 206, Final'' depicts the blocks on which one or more of 12 
lease stipulations apply: (1) Topographic Features; (2) Live Bottoms; 
(3) Military Areas; (4) Evacuation; (5) Coordination; (6) Blocks South 
of Baldwin County, Alabama; (7) Law of the Sea Convention Royalty 
Payment; (8) Protected Species; (9) Limitation on Use of Seabed and 
Water Column in the Vicinity of the Approved Port Pelican Offshore 
Liquefied Natural Gas (LNG) Deepwater Port Receiving Terminal, 
Vermilion Area, Blocks 139 and 140; (10) Below Seabed Operations on 
Mississippi Canyon, Block 920; (11) Limitation on Use of Seabed and 
Water Column in the Vicinity of the Approved Gulf Landing Offshore LNG 
Deepwater Port Receiving Terminal, West Cameron Area, Block 213; and 
(12) Below Seabed Operations on a Portion of Mississippi Canyon, Block 
650. The texts of the stipulations are contained in the document 
``Lease Stipulations, Central Gulf of Mexico Planning Area Oil and Gas 
Lease Sale 206, Final'' included in the FNOS 206 Package. In addition, 
the ``List of Blocks Available for Leasing'' contained in the FNOS 206 
Package identifies for each block listed the lease stipulations 
applicable to that block.
    Information to Lessees: The FNOS 206 Package contains an 
``Information To Lessees'' document that provides detailed information 
on certain specific issues pertaining to this proposed oil and gas 
lease sale.
    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 206, not to be opened until 9 a.m., Wednesday, March 
19, 2008.'' The submitting company's name, its GOM company number, the 
map name, map number, and block number should be clearly identified on 
the outside of the envelope.
    Please refer to the sample bid envelope included within the FNOS 
206 Package. The total amount of the 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 FNOS 206 Package. A blank bid form has been provided 
for your convenience which may be copied and filled in.
    Please also refer to the Telephone Numbers/Addresses of Bidders 
Form included within the FNOS 206 Package. We are requesting that you 
provide this information in the format suggested for each lease sale. 
Please provide this information prior to or at the time of bid 
submission. Do not enclose this form inside the sealed bid envelope.
    The MMS published in the Federal Register a list of restricted 
joint bidders, which applies to this lease sale, at 72 FR 64088 on 
November 14, 2007. Please also refer to joint bidding provisions at 30 
CFR 256.41 for additional information. All bidders must execute all 
documents in conformance with signatory authorizations on file in the 
MMS Gulf of Mexico Region Adjudication Unit. Designated signatories 
must be authorized to bind their respective legal business entities 
(e.g., a corporation, partnership, or LLC) and must have an incumbency 
certificate setting forth the authorized signatories on file with the 
GOM Region Adjudication Office. Bidders submitting joint bids must 
include on the bid form the proportionate interest of each 
participating bidder, stated as a percentage, using 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 payment of 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 206 Package).
    Rounding: The following procedure must be used to calculate the 
minimum bonus bid, annual rental, and minimum royalty: Round up to the 
next whole acre if the block acreage contains a decimal figure prior to 
calculating the minimum bonus bid, annual rental, and minimum royalty 
amounts. The appropriate rate per acre is applied to the next whole 
(rounded up) acreage figure, and the resultant calculation is rounded 
up to the next whole dollar amount if the calculation results in a 
decimal figure (see next paragraph).
    Please note: The minimum bonus bid calculation, including all 
rounding, is shown in the document ``List of Blocks Available for 
Leasing in Lease Sale 206'' included in the FNOS 206 Package.

[[Page 8352]]

    Bonus Bid Deposit: Each bidder submitting an apparent high bid must 
submit a bonus bid deposit to the MMS equal to one-fifth of the bonus 
bid amount for each such bid. Under the authority granted by 30 CFR 
256.46(b), the MMS requires bidders to use electronic funds transfer 
(EFT) procedures for payment of one-fifth bonus bid deposits for Lease 
Sale 206, following the detailed instructions contained in the document 
``Instructions for Making EFT Bonus Payments'' which can be found on 
the MMS Web site at http://www.gomr.mms.gov/homepg/lsesale/206/cgom206.html. All payments must be electronically deposited into an 
interest-bearing account in the U.S. Treasury (account specified in the 
EFT instructions) by 11 a.m. Eastern Time the day following the 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, however, 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 are NOT 
currently an OCS mineral lease record titleholder or designated 
operator OR those that have ever defaulted on a one-fifth bonus bid 
payment (EFT or otherwise)) are required to guarantee (secure) their 
one-fifth bonus bid payment prior to the submission of bids. For those 
who must secure the EFT one-fifth bonus bid payment, one of the 
following options may be used: (1) Provide a third-party guarantee; (2) 
amend bond coverage; (3) provide a letter of credit; or (4) provide 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 lease 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 FNOS 206 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 Act, and other applicable regulations may be 
returned to the person submitting that bid by the RD and not considered 
for acceptance. The Attorney General may also review the results of the 
lease sale prior to the acceptance of bids and issuance of leases. To 
ensure that the Government receives a fair return for the conveyance of 
lease rights for this lease sale, high bids will be evaluated in 
accordance with MMS bid adequacy procedures. A copy of current 
procedures, ``Modifications to the Bid Adequacy Procedures'' at 64 FR 
37560 on July 12, 1999, can be obtained from the MMS Gulf of Mexico 
Region Public Information Unit or via the MMS Internet Web site at: 
http://www.gomr.mms.gov/homepg/lsesale/bidadeq.html.
    Successful Bidders: As required by the 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, as amended.
    Also, in accordance with regulations at 2 CFR Part 180 and 2 CFR 
Part 1400, 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.
    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 MMS Gulf of Mexico Region Adjudication 
Unit. 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 MMS 
Gulf of Mexico Region Adjudication Unit.
    Geophysical Data and Information Statement: Pursuant to 30 CFR 
251.12, the MMS has a right to access geophysical data and information 
collected under a permit in the OCS. Every bidder submitting a bid on a 
block in Sale 206, or participating as a joint bidder in such a bid, 
must submit a Geophysical Data and Information Statement (GDIS) 
identifying any processed or reprocessed pre- and post-stack depth 
migrated geophysical data and information used as part of the decision 
to bid or participate in a bid on the block. The GDIS should clearly 
identify the survey type-two dimensional (2-D) or three dimensional (3-
D); survey extent (i.e., number of line miles for 2D or number of 
blocks for 3D); and imaging type (pre-stack, post-stack and migration 
algorithm) of the data and information. The statement must also include 
the name and phone number of a contact person, and an alternate, who 
are both knowledgeable about the depth data listed, the owner or 
controller of the reprocessed data or information, the survey from 
which the data were reprocessed and the owner/controller of the 
original data set, the date of reprocessing, and whether the data were 
processed in-house or by a contractor. In the event such data and 
information include multiple data sets processed from the same survey 
using different velocity models or different processing parameters, you 
should identify only the highest quality data set used for bid 
preparation. The MMS reserves the right to query about alternate data 
sets and to quality check and compare the listed and alternative data 
sets to determine which data set most closely meets the needs of the 
fair-market-value determination process. The statement must also 
identify each block upon which a bidder bid, or participated in a bid, 
but for which it did not use processed or reprocessed pre- or post-
stack depth migrated geophysical data and information as part of the 
decision to bid or participate in the bid. In the event your company 
supplies any type of data to the MMS, in order to get reimbursed, your 
company must be registered with the Central Contractor Registration 
(CCR) at http://www.ccr.gov. This is a requirement that was implemented 
on October 1, 2003, and requires all entities doing business with the 
Government to complete a business profile in the CCR and update it 
annually. Payments are made electronically based on the information 
contained in the CCR. Therefore, if your company is not actively 
registered in the CCR, the MMS will not be able to reimburse or pay 
your company for any data supplied. The MMS will specify additional 
detailed procedures in the FNOS 206 Package regarding the GDIS. Please 
also refer to Notice to Lessees No. 2003-G05 for more detail concerning 
submission of the GDIS, making the data available to the MMS following 
the lease sale,

[[Page 8353]]

preferred format, reimbursement for costs, and confidentiality.
    Force Majeure: The Regional Director of the MMS Gulf of Mexico 
Region has the discretion to change any date, time, and/or location 
specified in the FNOS 206 Package in case of a force majeure which the 
Regional Director deems may interfere with the carrying out of a fair 
and proper lease sale process. Such events may include, but are not 
limited to, natural disasters (earthquakes, hurricanes, floods), wars, 
riots, acts of terrorism, fire, strikes, civil disorder, or other 
events of a similar nature. In case of such events, bidders should call 
(504) 736-0557 for information about any changes.

    Dated: February 6, 2008.
Randall B. Luthi,
Director, Minerals Management Service.
[FR Doc. E8-2684 Filed 2-12-08; 8:45 am]
BILLING CODE 4310-MR-P