Outer Continental Shelf, Western Gulf of Mexico, Oil and Gas Lease Sale 161

1. Authority. This Notice is published pursuant to the Outer

Continental Shelf (OCS) Lands Act (43 U.S.C. 1331-1356, as amended) and

the regulations issued thereunder (30 CFR Part 256).

2. (a) Filing of Bids. Sealed bids will be received by the Regional

Director (RD), Gulf of Mexico Region, Minerals Management Service

(MMS), 1201 Elmwood Park Boulevard, New Orleans, Louisiana 70123-2394.

Bids may be delivered in person to that address during normal business

hours (8 a.m. to 4 p.m., Central Standard Time (c.s.t.)) until the Bid

Submission Deadline at 10 a.m. Tuesday, September 24, 1996.

Hereinafter, all times cited in this Notice refer to c.s.t. unless

otherwise stated. Bids will not be accepted the day of Bid Opening,

Wednesday, September 25, 1996. Bids received by the RD later than the

time and date specified above will be returned unopened to the bidders.

Bids may not be modified or withdrawn unless written modification or

written withdrawal request is received by the RD prior to 10 a.m.

Tuesday, September 24, 1996. Bid Opening Time will be 9 a.m.,

Wednesday, September 25, 1996, at the Royal Sonesta Hotel, 300 Bourbon

Street, New Orleans, Louisiana. All bids must be submitted and will be

considered in accordance with applicable regulations, including 30 CFR

Part 256. The list of restricted joint bidders which applies to this

sale appeared in the Federal Register at 61 FR 15968, published on

April 10, 1996.

(b) In the event a natural disaster (such as widespread flooding)

or other occurrence causes the MMS Gulf of Mexico Regional Office to be

closed on Tuesday, September 24, 1996, bids will be accepted until 9

a.m. Wednesday, September 25, 1996, at the site of bid opening

specified above. Under these conditions, bids may be modified or

withdrawn upon written notification up until 9 a.m. Wednesday,

September 25, 1996. Closure of the office may be determined by calling

(504) 736-0557 and hearing a recorded message to that effect.

3. Method of Bidding.

(a) Submission of Bids. A separate signed bid in a sealed envelope

labeled ``Sealed Bid for Oil and Gas Lease Sale 161, not to be opened

until 9 a.m., c.s.t., Wednesday, September 25, 1996'' must be submitted

for each tract bid upon. The sealed envelope and the bid should contain

the following information: the company name, Gulf of Mexico Company

Number (GOM Company Number), area number and/or name (abbreviations

acceptable), and the block number of the tract bid upon. In addition,

the total amount bid to be considered by MMS must be in whole dollar

amount. Any cent amount above the whole dollar will be ignored by MMS.

Bidders must submit with each bid \1/5\ of the cash bonus, in cash

or by cashier's check, bank draft, or certified check, payable to the

order of the U.S. Department of the Interior--Minerals Management

Service. For identification purposes, the following information must

appear on the check or draft: company name, GOM Company Number, and the

area and block bid on (abbreviation acceptable). No bid for less than

all of the unleased portion(s) of a block will be considered.

All documents must be executed in conformance with signatory

authorizations on file in the MMS Gulf of Mexico Regional Office.

Partnerships also need to submit or have on file a list of signatories

authorized to bind the partnership. Bidders submitting joint bids must

state on the bid form the proportionate interest of each participating

bidder, in percent to a maximum of five decimal places, e.g., 33.33333

percent. Other documents may be required of bidders under 30 CFR

256.46. Bidders are warned against violation of 18 U.S.C. 1860

prohibiting unlawful combination or intimidation of bidders.

(b) Submission of Statement(s) Regarding Certain Geophysical Data.

Each company submitting a bid, or participating as a joint bidder in

such a bid, shall submit, prior to the Bid Submission Deadline

specified in paragraph 2 of this Notice, a statement or statements

identifying any processed or reprocessed pre and post stack depth

migrated geophysical data in their possession or control pertaining to

each and every block on which they are participating as a bidder. The

existence, extent, type of such data, and identification of specific

lines or 3D surveys must be clearly stated. In addition, the statement

shall certify that no such data are in their possession for any other

blocks on which they participate as a bidder. The statement shall be

submitted in an envelope separate from those containing bids and shall

be clearly marked; an example of a preferred format for the statement

and the envelope is included in the document titled ``Trial Procedures

for Access to Certain Geophysical Data in the Gulf of Mexico'' (revised

January 19, 1996). Only one statement per bidder is required for each

sale, but more than one may be submitted if desired, provided that all

tracts bid on by that company are covered in the one or more

statements.

Paragraph 14(j), Information to Lessees, contains additional

information pertaining to geophysical data.

4. Bidding, Yearly Rental, and Royalty Systems. The following

bidding, yearly rental, and royalty systems apply to this sale:

(a) Bidding Systems. All bids submitted at this sale must provide

for a cash bonus in the amount of $25.00 or more per acre or fraction

thereof.

(b) Yearly Rental. All leases awarded on tracts in water depths of

200 meters and greater as depicted on the map ``Royalty Suspension

Areas For The Western Gulf Of Mexico'' provided with this Notice (i.e.,

tracts in any of the three royalty suspension areas) will provide for a

yearly rental payment of $7.50 per acre or fraction thereof until

initial production is obtained.

All leases awarded on other tracts (i.e., those in water depths of

less than 200 meters) will provide for a yearly rental payment of $5.00

per acre or fraction thereof until initial production is obtained.

(c) Royalty Systems. After initial production is obtained, leases

will provide for a minimum royalty of the amount per acre or fraction

thereof as specified as the yearly rental in paragraph 4(b) above,

except during periods of royalty suspension as discussed in paragraph

4(c)(3) of this Notice. The following royalty systems will be used in

this sale:

(1) Leases with a 12\1/2\-Percent Royalty. This royalty rate

applies to tracts in water depths of 400 meters or greater; this area

is shown on the Stipulations, Lease Terms, and Bidding Systems Map

applicable to this Notice (see paragraph 13). Leases issued on the

tracts offered in this area will have a fixed royalty rate of 12\1/2\

percent, except during periods of royalty suspension (see paragraph

4(c)(3) of this Notice).

(2) Leases with a 16\2/3\-Percent Royalty. This royalty rate

applies to tracts in water depths of less than 400 meters (see

aforementioned map). Leases issued on the tracts offered in this area

will have a fixed royalty rate of 16\2/3\ percent, except during

periods of royalty suspension for leases in water depths 200 meters or

greater (see paragraph 4(c)(3) of this Notice).

[[Page 42715]]

(3) Royalty Suspension. In accordance with Public Law 104-58,

signed by the President on November 28, 1995, MMS has developed

procedures providing for the suspension of royalty payments on

production from eligible leases issued as a result of this sale. MMS

will allow only one royalty suspension volume per field regardless of

the number of eligible leases producing the field. For purposes of this

paragraph, an eligible lease is one that: is located in the Gulf of

Mexico in water depths 200 meters or deeper; lies wholly west of 87

degrees, 30 minutes West longitude; and is offered subject to a royalty

suspension volume authorized by statute.

An eligible lease from this sale may receive a royalty suspension

volume only if it is in a field where no currently active lease

produced oil or gas (other than test production) before November 28,

1995. The following applies only to eligible leases in fields meeting

this condition.

(i) The royalty suspension volumes are:

--17.5 million barrels of oil equivalent (mmboe) in 200 to 400 meters

of water;

--52.5 mmboe in 400 to 800 meters of water; and

--87.5 mmboe in 800 meters of water and greater.

A map titled ``Royalty Suspension Areas For The Western Gulf Of

Mexico'' (March 1996) depicting blocks in which such suspensions may

apply is currently available from the MMS Gulf of Mexico Regional

Office (see paragraph 14(a) of this Notice).

(ii) When production first occurs from any of the eligible leases

in a field (not including test production), MMS will determine the

royalty suspension volume applicable to eligible lease(s) in that

field. The determination is based on the royalty suspension volumes and

the map specified in paragraph 4(c)(3)(i) above.

(iii) If a new field consists of eligible leases in different water

depth categories, the royalty suspension volume associated with the

deepest eligible lease applies.

(iv) If an eligible lease is the only eligible lease in a field,

royalty is not owed on the production from the lease up to the amount

of the applicable royalty suspension volume.

(v) If a field consists of more than one eligible lease, payment of

royalties on the eligible leases' initial production is suspended until

their cumulative production equals the field's established royalty

suspension volume. The royalty suspension volume for each eligible

lease is equal to each lease's actual production (or production

allocated under an approved unit agreement) until the field's

established royalty suspension volume is reached.

(vi) If an eligible lease is added to a field that has an

established royalty suspension volume, the field's royalty suspension

volume will not change even if the added lease is in deeper water. The

additional lease may receive a royalty suspension volume only to the

extent of its production before the cumulative production from all

eligible leases in the field equals the field's previously established

royalty suspension volume.

(vii) If MMS reassigns a well on an eligible lease to another

field, the past production from that well will count toward the royalty

suspension volume, if any, specified for the new field to which it is

assigned. The past production will not be counted toward the suspension

volume, if any, from the first field.

(viii) An eligible lease may receive a royalty suspension volume

only if the entire lease is west of 87 degrees, 30 minutes West

longitude. A field that lies on both sides of this meridian will

receive a royalty suspension volume only for those eligible leases

lying entirely west of the meridian.

(ix) An eligible lease may obtain more than one royalty suspension

volume. If a new field is discovered on an eligible lease that already

benefits from the royalty suspension volume for another field,

production from that new field receives a separate royalty suspension.

(x) A lessee must measure natural gas production subject to the

royalty suspension volume as follows: 5.62 thousand cubic feet of

natural gas equals one barrel of oil equivalent, as measured fully

saturated at 15.025 psi, 60 degrees F.

(xi) In any year during which the arithmetic average of the closing

prices on the New York Mercantile Exchange for light sweet crude oil

exceeds $28.00 per barrel, royalties on the production of oil must be

paid at the lease stipulated royalty rate (see paragraphs 4(c) (1) and

(2) above), and production during such years counts toward the royalty

suspension volume.

In any year during which the arithmetic average of the closing

prices on the New York Mercantile Exchange for natural gas exceeds

$3.50 per million British thermal units, royalties on the production of

natural gas must be paid at the lease stipulated royalty rate (see

paragraphs 4(c) (1) and (2) above), and production during such years

counts toward the royalty suspension volume.

These prices for oil and natural gas are as of the end of 1994 and

must be adjusted for subsequent years by the percentage by which the

implicit price deflator for the gross domestic product changed during

the preceding calendar year.

(xii) A royalty suspension will continue until the end of the month

in which the cumulative production from eligible leases in the field

reaches the royalty suspension volume for the field.

Paragraph 14(l), Information to Lessees, contains additional

information pertaining to royalty suspension matters.

5. Equal Opportunity. The certification required by 41 CFR 60-

1.7(b) and Executive Order No. 11246 of September 24, 1965, as amended

by Executive Order No. 11375 of October 13, 1967, on the Compliance

Report Certification Form, Form MMS-2033 (June 1985), and the

Affirmative Action Representation Form, Form MMS-2032 (June 1985) must

be on file in the MMS Gulf of Mexico Regional Office prior to lease

award (see paragraph 14(e)).

6. Bid Opening. Bid opening will begin at the bid opening time

stated in paragraph 2. The opening of the bids is for the sole purpose

of publicly announcing bids received, and no bids will be accepted or

rejected at that time.

7. Deposit of Payment. Any cash, cashier's checks, certified

checks, or bank drafts submitted with a bid may be deposited by the

Government in an interest-bearing account in the U.S. Treasury during

the period the bids are being considered. Such a deposit does not

constitute and shall not be construed as acceptance of any bid on

behalf of the United States.

8. Withdrawal of Tracts. The United States reserves the right to

withdraw any tract from this sale prior to issuance of a written

acceptance of a bid for the tract.

9. 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 tract will be awarded to any bidder,

unless:

(a) the bidder has complied with all requirements of this Notice

and applicable regulations;

(b) the bid is the highest legal bid; and

(c) the amount of the bid has been determined to be adequate by the

authorized officer.

No bonus bid will be considered for acceptance unless it provides

for a cash bonus in the amount of $25.00 or more per acre or fraction

thereof. 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

[[Page 42716]]

to the person submitting that bid by the RD and not considered for

acceptance.

To ensure that the Government receives a fair return for the

conveyance of lease rights for this sale, the MMS has modified its two-

phased process for bid adequacy determination. The MMS will not

automatically accept legal high bids on confirmed and wildcat tracts

which receive three or more bids. Such tracts will be evaluated in

accordance with the remaining elements of the MMS bid adequacy

procedures. This modification was described in the Federal Register on

March 29, 1996 (61 FR 14162). A copy of the revised bid adequacy

procedures (``Summary of Procedures for Determining Bid Adequacy at

Offshore Oil and Gas Lease Sales: Effective April 1996, with Sale

157'') is available from the MMS Gulf of Mexico Regional Office (see

paragraph 14(a) of this Notice).

10. Successful Bidders. The following requirements apply to

successful bidders in this sale:

(a) Lease Issuance.

Each person who has submitted a bid accepted by the authorized

officer will be required to execute copies of the lease (Form MMS-2005

(March 1986) as amended), pay the balance of the cash bonus bid along

with the first year's annual rental for each lease issued by electronic

funds transfer in accordance with the requirements of 30 CFR 218.155,

and satisfy the bonding requirements of 30 CFR 256, Subpart I, as

amended.

Paragraphs 14 (m) and (n), Information to Lessees, contain

additional information pertaining to this matter.

(b) Certification Regarding Nonprocurement Debarment, Suspension,

and Other Responsibility Matters--Primary Covered Transactions.

Each person involved as a bidder in a successful high bid must have

on file, in the MMS Gulf of Mexico Regional Office Adjudication Unit, a

currently valid certification that the person is not excluded from

participation in primary covered transactions under Federal

nonprocurement programs and activities. A certification previously

provided to that office remains currently valid until new or revised

information applicable to that certification becomes available. In the

event of new or revised applicable information, a subsequent

certification is required before lease issuance can occur. Persons

submitting such certifications should review the requirements of 43

CFR, Part 12, Subpart D, as amended in the Federal Register of June 26,

1995, at 60 CFR 33035.

Copies of the certification form are available from the MMS Gulf of

Mexico Regional Office Public Information Unit. See Paragraph 14(a) of

this Notice for directions on how to obtain the forms.

11. Leasing Maps and Official Protraction Diagrams. Tracts offered

for lease may be located on the following Leasing Maps or Official

Protraction Diagrams which may be purchased from the MMS Gulf of Mexico

Regional Office (see paragraph 14(a)):

(a) Outer Continental Shelf Leasing Maps--Texas, Nos. 1 through 8.

This is a set of 16 maps which sells for $18.00.

(b) Outer Continental Shelf Official Protraction Diagrams. These

diagrams sell for $2.00 each.

NG 14-3 Corpus Christi (rev. 01/27/76)

NG 14-6 Port Isabel (rev. 01/15/92)

NG 15-1 East Breaks (rev. 01/27/76)

NG 15-2 Garden Banks (rev. 10/19/81)

NG 15-4 Alaminos Canyon (rev. 04/27/89)

NG 15-5 Keathley Canyon (rev. 04/27/89)

NG 15-8 (No Name) (rev. 04/27/89)

12. Description of the Areas Offered for Bids.

(a) Acreage of blocks is shown on Leasing Maps and Official

Protraction Diagrams. Some of these blocks, however, may be partially

leased, or transected by administrative lines such as the Federal/State

jurisdictional line. Information on the unleased portions of such

blocks, including the exact acreage, is included in the following

document as a part of this Notice and is currently available from the

MMS Gulf of Mexico Regional Office:

Western Gulf of Mexico Lease Sale 161--Final Notice. Unleased Split

Blocks and Unleased Acreage of Blocks with Aliquots and Irregular

Portions Under Lease.

(b) Tracts not available for leasing. The areas offered for leasing

include all those blocks shown on the OCS Leasing Maps and Official

Protraction Diagrams listed in paragraph 11 (a) and (b), except for

those blocks or partial blocks already under lease. A list of Western

Gulf of Mexico tracts currently under lease is included in the Sale

Notice Package available from the MMS Gulf of Mexico Regional Office

(see paragraph 14(a)).

(1) Although they are currently unleased, no bids will be accepted

on High Island Area, East Addition, South Extension, Blocks A-375 and

A-398 (at the Flower Garden Banks).

(2) Although they are currently unleased, no bids will be accepted

on the following blocks located off Corpus Christi which have been

identified by the Navy as needed for testing equipment and training

mine warfare personnel: Mustang Island Area Blocks 793, 799, and 816.

(3) Although they are currently unleased, no bids will be accepted

on the following blocks which are currently under appeal: High Island

Area Block 170, and Galveston Area, South Addition, Block A-125.

Note: As noted in the Final Notice of Sale for Sale 157, tracts

or portions of tracts beyond the United States Exclusive Economic

Zone are offered based upon provisions of the 1982 Law of the Sea

Convention, and could be subject to a continental shelf delimitation

agreement between the United States and Mexico.

A list of these tracts or portions of tracts and a map are

included in the Sale Notice Package available from the MMS Gulf of

Mexico Regional Office (see paragraph 14(a)).

13. Lease Terms and Stipulations.

(a) Leases resulting from this sale will have initial terms as

shown on the Stipulations, Lease Terms, and Bidding Systems Map

applicable to this Notice and will be on Form MMS-2005 (March 1986).

Copies of the map and lease form are available from the MMS Gulf of

Mexico Regional Office (see paragraph 14(a)).

(b) The applicability of the stipulations which follow is as shown

on the map described in paragraph 13(a) and as supplemented by

references in this Notice.

Stipulation No. 1--Topographic Features.

(This stipulation will be included in leases located in the areas

so indicated in the Biological Stipulation Map Package associated with

this Notice which is available from the MMS Gulf of Mexico Regional

Office (see paragraph 14(a).)

The banks that cause this stipulation to be applied to blocks of

the Western Gulf are:

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

No activity zone defined by

Bank name Isobath (meters)

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

Shelf Edge Banks

West Flower Garden Bank \1\ (defined by 1/ 100

4 1/4 1/4 system).

East Flower Garden Bank \1\ (defined by 1/ 100

4 1/4 1/4 system).

MacNeil Bank............................. 82

29 Fathom Bank........................... 64

Rankin Bank.............................. 85

Geyer Bank............................... 85

Elvers Bank.............................. 85

Bright Bank \2\.......................... 85

McGrail Bank \2\......................... 85

Rezak Bank \2\........................... 85

Sidner Bank \2\.......................... 85

Parker Bank \2\.......................... 85

Stetson Bank............................. 52

Appelbaum Bank........................... 85

[[Page 42717]]

Low Relief Banks \3\

Mysterious Bank.......................... 74,76,78,

80,84

Coffee Lump.............................. Various

Blackfish Ridge.......................... 70

Big Dunn Bar............................. 65

Small Dunn Bar........................... 65

32 Fathom Bank........................... 52

Claypile Bank \4\........................ 50

South Texas Banks \5\

Dream Bank............................... 78,82

Southern Bank............................ 80

Hospital Bank............................ 70

North Hospital Bank...................... 68

Aransas Bank............................. 70

South Baker Bank......................... 70

Baker Bank............................... 70

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

\1\ Flower Garden Banks--In paragraph (c) a ``4-Mile Zone'' rather than

a ``1-Mile Zone'' applies.

\2\ Central Gulf of Mexico bank with a portion of its ``1-Mile Zone''

and/or ``3-Mile Zone'' in the Western Gulf of Mexico.

\3\ Low Relief Banks--Only paragraph (a) applies.

\4\ Claypile Bank--Paragraphs (a) and (b) apply. In paragraph (b)

monitoring of the effluent to determine the effect on the biota of

Claypile Bank shall be required rather than shunting.

\5\ South Texas Banks--Only paragraphs (a) and (b) apply.

(a) No activity including structures, drilling rigs, pipelines, or

anchoring will be allowed within the listed isobath (``No Activity

Zone'' as shown in the aforementioned Biological Stipulation Map

Package) of the banks as listed above.

(b) Operations within the area shown as ``1,000-Meter Zone'' in the

aforementioned Biological Stipulation Map Package shall be restricted

by shunting all drill cuttings and drilling fluids to the bottom

through a downpipe that terminates an appropriate distance, but no more

than 10 meters, from the bottom.

(c) Operations within the area shown as ``1-Mile Zone'' in the

aforementioned Biological Stipulation Map Package shall be restricted

by shunting all drill cuttings and drilling fluids to the bottom

through a downpipe that terminates an appropriate distance, but no more

than 10 meters, from the bottom. (Where there is a ``1-Mile Zone''

designated, the ``1,000-Meter Zone'' in paragraph (b) is not

designated.)

(d) Operations within the area shown as ``3-Mile Zone'' in the

aforementioned Biological Stipulation Map Package shall be restricted

by shunting all drill cuttings and drilling fluids from development

operations to the bottom through a downpipe that terminates an

appropriate distance, but no more than 10 meters, from the bottom.

Stipulation No. 2--Military Areas

(This stipulation will be included in leases located within the Warning

Areas as shown on the map described in paragraph 13(a).)

(a) Hold and Save Harmless

Whether compensation for such damage or injury might be due under a

theory of strict or absolute liability or otherwise, the lessee assumes

all risks of damage or injury to persons or property, which occur in,

on, or above the Outer Continental Shelf (OCS), to any persons or to

any property of any person or persons who are agents, employees, or

invitees of the lessee, its agents, independent contractors, or

subcontractors doing business with the lessee in connection with any

activities being performed by the lessee in, on, or above the OCS, if

such injury or damage to such person or property occurs by reason of

the activities of any agency of the United States Government, its

contractors or subcontractors, or any of its officers, agents or

employees, being conducted as a part of, or in connection with, the

programs and activities of the command headquarters listed in the

following table.

Notwithstanding any limitation of the lessee's liability in Section

14 of the lease, the lessee assumes this risk whether such injury or

damage is caused in whole or in part by any act or omission, regardless

of negligence or fault, of the United States, its contractors or

subcontractors, or any of its officers, agents, or employees. The

lessee further agrees to indemnify and save harmless the United States

against all claims for loss, damage, or injury sustained by the lessee,

or to indemnify and save harmless the United States against all claims

for loss, damage, or injury sustained by the agents, employees, or

invitees of the lessee, its agents, or any independent contractors or

subcontractors doing business with the lessee in connection with the

programs and activities of the aforementioned military installation,

whether the same be caused in whole or in part by the negligence or

fault of the United States, its contractors, or subcontractors, or any

of its officers, agents, or employees and whether such claims might be

sustained under a theory of strict or absolute liability or otherwise.

(b) Electromagnetic Emissions

The lessee agrees to control its own electromagnetic emissions and

those of its agents, employees, invitees, independent contractors or

subcontractors emanating from individual designated defense warning

areas in accordance with requirements specified by the commander of the

command headquarters listed in the following table to the degree

necessary to prevent damage to, or unacceptable interference with,

Department of Defense flight, testing, or operational activities,

conducted within individual designated warning areas. Necessary

monitoring control, and coordination with the lessee, its agents,

employees, invitees, independent contractors or subcontractors, will be

effected by the commander of the appropriate onshore military

installation conducting operations in the particular warning area;

provided, however, that control of such electromagnetic emissions shall

in no instance prohibit all manner of electromagnetic communication

during any period of time between a lessee, its agents, employees,

invitees, independent contractors or subcontractors and onshore

facilities.

(c) Operational

The lessee, when operating or causing to be operated on its behalf,

boat, ship, or aircraft traffic into the individual designated warning

areas shall enter into an agreement with the commander of the

individual command headquarters listed in the following list, upon

utilizing an individual designated warning area prior to commencing

such traffic. Such an agreement will provide for positive control of

boats, ships, and aircraft operating into the warning areas at all

times.

W-228--Chief, Naval Air Training, Naval Air Station, Office No. 206,

Corpus Christi, Texas 78419-5100, Telephone: (512) 939-3862/2621

W-602--Headquarters ACC/DORR, Detachment 1, Operations Headquarters,

Air Combat Command, Offutt AFB, Nebraska 68113-5550, Telephone: (402)

294-2334

Stipulation No. 3--Operations in the Naval Mine Warfare Area

(This stipulation will apply to Mustang Island Area East Addition

Blocks 732, 733, and 734.)

(a) The placement, location, and planned periods of operation of

surface structures on this lease during the exploration stage are

subject to approval by the Regional Director (RD), Minerals Management

Service Gulf of Mexico Region, after the review of the operator's

Exploration Plan (EP). Prior to approval of the EP, the RD will consult

with the Commander, Mine Warfare Command, in order to determine the

EP's

[[Page 42718]]

compatibility with scheduled military operations. No permanent

structures nor debris of any kind shall be allowed in the area covered

by this lease during exploration operations.

(b) To the extent possible, sub-seafloor development operations for

resources subsurface to this area should originate outside the area

covered by this lease. Any above-seafloor development operations within

the area covered by this lease must be compatible with scheduled

military operations as determined by the Commander, Mine Warfare

Command. The lessee will consult with and coordinate plans for above-

seafloor development activities (including abandonment) with the

Commander, Mine Warfare Command. The Development Operations

Coordination Document (DOCD) must contain the locations of any

permanent structures, fixed platforms, pipelines, or anchors planned to

be constructed or placed in the area covered by this lease as part of

such development operations. The DOCD must also contain the written

comments of the Commander, Mine Warfare Command on the proposed

activities. Prior to the approval of the DOCD, the RD will consult with

the Commander in order to determine the DOCD's compatibility with

scheduled military operations.

For more information, consultation, and coordination, the lessee

must contact:

Commander, Mine Warfare Command, 325 Fifth Street, SE., Corpus Christi,

Texas 78419-5032, Phone: (512) 939-4895

14. Information to Lessees.

(a) Supplemental Documents. For copies of the various documents

identified as available from the MMS Gulf of Mexico Regional Office,

prospective bidders should contact the Public Information Unit,

Minerals Management Service, 1201 Elmwood Park Boulevard, New Orleans,

Louisiana 70123-2394, either in writing or by telephone at (504) 736-

2519 or (800) 200-GULF. For additional information, contact the

Regional Supervisor for Leasing and Environment at that address or by

telephone at (504) 736-2759.

(b) Navigation Safety. Operations on some of the blocks offered for

lease may be restricted by designation of fairways, precautionary

zones, anchorages, safety zones, or traffic separation schemes

established by the U.S. Coast Guard pursuant to the Ports and Waterways

Safety Act (33 U.S.C. 1221 et seq.), as amended.

U.S. Army Corps of Engineers (COE) permits are required for

construction of any artificial islands, installations, and other

devices permanently or temporarily attached to the seabed located on

the OCS in accordance with Section 4(e) of the OCS Lands Act, as

amended.

For additional information, prospective bidders should contact Lt.

Commander Ken Parris, Assistant Marine Port Safety Officer, 8th Coast

Guard District, Hale Boggs Federal Building, New Orleans, Louisiana

70130, (504) 589-6901. For COE information, prospective bidders should

contact Mr. Dolan Dunn, Chief Evaluation Section, Regulatory Branch,

Post Office Box 1229, Galveston, Texas 77553, (409) 766-3935.

(c) Offshore Pipelines. Bidders are advised that the Department of

the Interior and the Department of Transportation have entered into a

Memorandum of Understanding, dated May 6, 1976, concerning the design,

installation, operation, and maintenance of offshore pipelines. Bidders

should consult both Departments for regulations applicable to offshore

pipelines.

(d) 8-Year Leases. Bidders are advised that any lease issued for a

term of 8 years will be canceled shortly after the end of the fifth

year, following notice pursuant to the OCS Lands Act, as amended, if

within the initial 5-year period of the lease, the drilling of an

exploratory well has not been initiated; or if initiated, the well has

not been drilled in conformance with the approved exploration plan

criteria; or if there is not a suspension of operations in effect.

Furthermore, a rental payment for the sixth year will be due despite

the cancellation. Bidders are referred to 30 CFR 256.37 and the MMS

Gulf of Mexico Regional Office Letter to Lessees and Operators of

February 13, 1995.

(e) Affirmative Action. Revision of Department of Labor regulations

on affirmative action requirements for Government contractors

(including lessees) has been deferred, pending review of those

regulations (see Federal Register of August 25, 1981, at 46 FR 42865

and 42968). Should changes become effective at any time before the

issuance of leases resulting from this sale, section 18 of the lease

form (Form MMS-2005, March 1986), would be deleted from leases

resulting from this sale. In addition, existing stocks of the

affirmative action forms described in paragraph 5 of this Notice

contain language that would be superseded by the revised regulations at

41 CFR 60-1.5(a)(1) and 60-1.7(a)(1). Submission of Form MMS-2032 (June

1985) and Form MMS-2033 (June 1985) will not invalidate an otherwise

acceptable bid, and the revised regulations' requirements will be

deemed to be part of the existing affirmative action forms.

(f) Ordnance Disposal Areas. Bidders are cautioned as to the

existence of two inactive ordnance disposal areas in the Corpus Christi

and East Breaks areas, shown on the map described in paragraph 13(a).

These areas were used to dispose of ordnance of unknown composition and

quantity. These areas have not been used since about 1970. Water depths

in the Corpus Christi area range from approximately 600 to 900 meters.

Water depths in the East Breaks area range from approximately 300 to

700 meters. Bottom sediments in both areas are generally soft,

consisting of silty clays. Exploration and development activities in

these areas require precautions commensurate with the potential

hazards.

(g) Archaeological Resources. Bidders are advised that a Final Rule

regarding archaeological resources was published in the Federal

Register on October 21, 1994 (59 FR 53091), granting specific authority

to each MMS Regional Director to require archaeological surveys and

reports (under 30 CFR 250, 256, 260, and 281) and the submission of

these reports to the Regional Director prior to exploration,

development and production, or installation of lease-term or right-of-

way pipelines. MMS Notice to Lessees (NTL) 91-02 (Outer Continental

Shelf Archaeological Resources Requirements for the Gulf of Mexico OCS

Region) published in the Federal Register on December 20, 1991 (50 FR

66076) effective February 17, 1992, specifies survey methodology,

linespacing, and archaeological report writing requirements for lessees

and operators in the MMS Gulf of Mexico Region.

Two additional documents are available from the MMS Gulf of Mexico

Region Public Information Office (see paragraph 14(a)):

``List of Lease Blocks Within the High-Probability Area for

Historic Period Shipwrecks on the OCS'' dated January 30, 1995. This

list supersedes the list promulgated by the MMS Letter to Lessees

(LTL) of November 30, 1990.

``List of Lease Blocks Within the High-Probability Area for

Prehistoric Archaeological Resources on the OCS'' dated January 30,

1995.

Implementation of this Final Rule and NTL 91-02 obviates the need

for the Protection of Archaeological Resources Stipulation required for

previous issues.

(h) Proposed Rigs to Reefs. Bidders are advised that there are OCS

artificial reef sites and planning areas for the Gulf

[[Page 42719]]

of Mexico. These are generally located in water depths of less than 200

meters. While all existing and proposed sites require a permit from the

U.S. Army Corps of Engineers, this ``Rigs to Reefs'' program is

implemented through State sponsorship through the following State

Coordinators:

Alabama Mr. Walter M. Tatum, (334) 968-7576

Florida Mr. Jon Dodrill, (904) 922-4340

Louisiana Mr. Rick Kasprzac, (504) 765-2375

Mississippi Mr. Mike Buchanan, (601) 385-5860

Texas Ms. Jan Coulbertson, (713) 474-1418

For more information, on artificial reef sites, prospective bidders

should contact the above listed State Artificial Reef Coordinators for

their areas of interest.

(i) Proposed Lightering Zones. Bidders are advised that the U.S.

Coast Guard has proposed designating certain areas of the Gulf of

Mexico (60 FR 1958 of January 5, 1995), as lightering zones for the

purpose of permitting single hull vessels to off-load oil within the

U.S. Exclusive Economic Zone. Such designation may have implications

for oil and gas operations in the areas. Additional information may be

obtained from Lieutenant Commander Stephen Kantz, Project Manager, Oil

Pollution Act (OPA 90) Staff, at (202) 267-6740.

(j) Statement Regarding Certain Geophysical Data. Pursuant to

Sections 18 and 26 of the OCS Lands Act, as amended, and the

regulations issued thereunder, MMS has a right of access to certain

geophysical data and information obtained or developed as a result of

operations on the OCS. MMS is sensitive to the concerns expressed by

industry regarding the confidentiality of individual company work

products and client lists and the potential burden of responding to a

myriad of requests from MMS pertaining to the existence and

availability of these types of reprocessed geophysical data. To resolve

the concerns of both industry and MMS with respect to such cases, MMS

has worked with industry to develop the requirements contained within

paragraph 3(b) Method of Bidding above. MMS has modified the previous

procedure to require that bidders who are in possession of the

requested data, now identify the specific data by line name or 3D

phase. This will help MMS in identifying time data that may already be

in our data base and at the same time not impose undue burden on

industry by rerequesting it. These requirements are being imposed on a

trial basis to determine their effectiveness and are subject to

modification in future sales.

The details of this requirement are specified in the document

``Trial Procedures for Access to Certain Geophysical Data in the Gulf

of Mexico'' (revised January 19, 1996), which is available upon request

from the MMS Gulf of Mexico Region Public Information Unit (see

paragraph 14(a)). In brief, these requirements include:

(1) In the period for ninety (90) days after the sale, bidders will

allow MMS to inspect such data within seven (7) days of a written

request from MMS, and upon further written request will transmit to

MMS, within ten (10) working days, such data. After this ninety day

period, a response time of thirty (30) days following an MMS written

request will be considered adequate.

(2) Successful bidders must retain such data for three (3) years

after the sale, and unsuccessful bidders must retain such data for six

(6) months after the sale, for possible acquisition by MMS.

For the six (6) month period after the sale, based on a review of

the allowable cost of data reproduction to MMS for three-dimensional

and two-dimensional data sets, the company providing the reprocessed

data will be reimbursed at a rate of $480 per block or part thereof for

three-dimensional data and $2 per line mile for two-dimensional data.

Afterwards, reimbursement will be subject to the terms and conditions

of 30 CFR 251.13(a).

All geophysical data and information obtained and reviewed by MMS

pursuant to these procedures shall be held in the strictest confidence

and treated as proprietary in accordance with the applicable terms of

30 CFR 251.14.

For additional information, contact the MMS Gulf of Mexico Regional

Office of Resource Evaluation at (504) 736-2720.

(k) Information about Indicated Hydrocarbons. Bidders are advised

that MMS makes available, about 3 months prior to a lease sale, a list

of unleased tracts having well bores with indicated hydrocarbons. Basic

information relating to production, well bores, and pay range for each

tract is included in the list. The list is available from the MMS Gulf

of Mexico Region Public Information Unit (see paragraph 14(a)).

(l) Royalty Relief. The Outer Continental Shelf (OCS) Deep Water

Royalty Relief Act authorizes the Secretary of the Interior to offer

certain deepwater OCS tracts in the Central and Western Gulf of Mexico

for lease with suspension of royalties for a volume, value, or period

of production the Secretary determines. An interim rule was published

in the Federal Register (61 FR 12022; March 25, 1996) that specifies

the royalty suspension terms under which the Secretary will make tracts

available for this sale. Bidders are advised to review that document

for additional details on this matter. For further information, bidders

may contact Walter Cruickshank of the MMS Offshore Minerals Analysis

Division at (202) 208-3822.

A map titled ``Royalty Suspension Areas For The Western Gulf Of

Mexico'' depicting blocks in which such suspensions may apply is

currently available from the MMS Gulf of Mexico Regional Office (see

paragraph 14(a) of this Notice).

The publication ``OCS Operations Field Names Master List'' depicts

currently established fields in the Gulf of Mexico. This document is

updated monthly and reprinted quarterly. Copies may be obtained from

the MMS Gulf of Mexico Regional Office (see paragraph 14(a) of this

Notice).

(m) Lease Instrument. Bidders are advised that the lease instrument

will include royalty relief provisions (paragraph 4(c)(3) of this

Notice) and 8-year lease cancellation provisions (paragraph 14(d) of

this Notice) where applicable. Leases will continue to be issued on

Form MMS-2005 (March 1986) as amended.

(n) Electronic Funds Transfer. Bidders are advised that the 4/5ths

and first year rental EFT instructions for lease payoff have been

revised and updated by MMS Royalty Management. Companies may now use

either the Fedwire Deposit System or the Automated Clearing House

(overnight payments). See paragraph 10(a) of this Notice.

(o) Minimizing Oil and Gas Structures Near the Flower Garden Banks.

Bidders are reminded of Notice to Lessees and Operators (NTL) 85-8,

``Minimizing Oil and Gas Structures in the Gulf of Mexico,'' dated

November 26, 1985. Section II of the NTL sets forth the MMS' policy

with regard to the minimization of structures for drilling,

development, and production on OCS leases. The policy requires that

such structures including lease-term pipelines be placed in a manner

that causes minimum interference with other significant uses of the

OCS. Please be advised that the MMS will strictly adhere to this policy

when reviewing Exploration Plans and Development Operations

Coordination Documents which propose the use or installation of such

structures within the ``Four-Mile Zone'' and adjacent areas surrounding

the Flower Garden Banks National Marine Sanctuary.

[[Page 42720]]

Dated: August 9, 1996.

Cynthia Quarterman,

Director, Minerals Management Service.

Approved:

Sylvia V. Baca,

Acting Assistant Secretary, Land and Minerals Management.

[FR Doc. 96-20861 Filed 8-15-96; 8:45 am]

BILLING CODE 4310-ME-P