# Outer Continental Shelf, Western Gulf of Mexico, Oil and Gas Lease Sale 168

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A97-19465

## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** July 24, 1997
- **Citation:** 62 FR 39863

## Text

DEPARTMENT OF THE INTERIOR

Minerals Management Service

Outer Continental Shelf, Western Gulf of Mexico, Oil and Gas
Lease Sale 168

AGENCY: Minerals Management Service, Interior.

ACTION: Final Notice of Sale.

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

1. Authority. This Notice is published pursuant to the Outer
Continental Shelf (OCS) Lands Act (43 U.S.C. 1331-1356, (1988)), and
the regulations issued thereunder (30 CFR Part 256).
A ``Sale Notice Package,'' containing this Notice and several
supporting documents referenced in the Notice, including the maps,
``Lease Terms, Bidding Systems, and Royalty Suspension Areas, Sale
168'' and ``Stipulations and Deferred Blocks, Sale 168,'' is available
from the MMS Gulf of Mexico Regional Office Public Information Unit
(see paragraph 14(a) of this Notice).
2. Filing of Bids.
(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, August 26, 1997. 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, August 27,
1997. 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modified or withdrawn unless written modification or written withdrawal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, August 26,
1997.

[[Page 39864]]

Note: As noted in the Final Notices of Sale for Sales 157, 161,
and 166, 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. For clarity and descriptive purposes, this area is
referred to in this Notice as the ``Northern Portion of the Western
Gap.'' 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 Public Information Unit (see paragraph
14(a)).

Procedures for opening of bids for all blocks except for blocks in
the Northern Portion of the Western Gap are specified in paragraph (1)
below. Procedures for opening of bids for blocks in the Northern
Portion of the Western Gap are specified in paragraph (2) below:
(1) Bid Opening Time will be 9 a.m., Wednesday, August 27, 1997, 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 62 FR 14699, published on March 27, 1997.
(2) Procedures for opening bids on blocks in this area will differ
from procedures described above as follows: The MMS will set aside bids
for blocks in the Northern Portion of the Western Gap until a future
date. On or before March 3, 1998, the Secretary will determine whether
it is in the best interest of the United States either to open bids for
these blocks or to return the bids unopened. The MMS will notify
bidders at least 30 days prior to bid opening. Bidders on these blocks
may withdraw their bids at any time after such notice and prior to 10
a.m. (c.s.t.) of the day before bid opening. If MMS does not give
notice by March 3, 1998, MMS will return the bids unopened. This will
provide time for companies to make decisions regarding the next annual
Central Gulf and the next annual Western Gulf lease sales, proposed for
March and August 1998, respectively, which may also, as they have for
more than the past decade, offer tracts in the Northern Portion of the
Western Gap. 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 and until the bids are opened.
(b) Natural Disasters. 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, August 26, 1997, bids will be
accepted until 9 a.m., Wednesday, August 27, 1997, 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,
August 27, 1997. Closure of the office may be determined by calling
(504) 736-0557 and hearing a recorded message to that effect.
3. Method of Bidding.
Procedures for the submission of bids in Sale 168 are described in
paragraph (a) below. Procedures for the submission of bids for blocks
in the Northern Portion of the Western Gap will differ from bid
submission procedures for bids on blocks outside that area. These
differences are specified in paragraph (b) below.
(a) Submission of Bids. A separate signed bid in a sealed envelope
labeled ``Sealed Bid for Oil and Gas Lease Sale 168, not to be opened
until 9 a.m., c.s.t., Wednesday, August 27, 1997'' 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), Leasing Map or Official Protraction
Diagram number (e.g., TEX-MAP No. 1 for the South Padre Island Area, NG
14-3 for the Corpus Christi Area), and the area name and block number
of the tract bid upon. In addition, the total amount bid to be
considered by MMS must be in a whole dollar amount. Any cent amount
above the whole dollar will be ignored by MMS. No bid for less than all
of the available portion(s) of a block will be considered.
All documents must be executed in conformance with signatory
authorizations on file in the 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.
Bidders must submit the 1/5th cash bonus using one of the following
options:
(1) Bidders may submit with each bid 1/5th 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); or
(2) Bidders may use electronic funds transfer (EFT) payment for 1/
5th of the cash bonus, payable to the Minerals Management Service.
Bidders who choose this method must contact MMS Royalty Management (Mr.
David Menard at (303) 231-3574) by the Bid Submission Deadline to
inform MMS of their intent to use EFT, to clarify EFT procedures to be
used, and to designate an EFT coordinator. Joint bidders must designate
one bidder as EFT coordinator. EFT coordinators must submit the bids
and ensure that the total of the 1/5 cash bonus for the high bids they
submit is transferred to MMS via EFT. The EFT payment shall be made by
either the Fedwire Deposit System (same day payments) or the Automated
Clearing House (overnight payments).
The Gulf of Mexico OCS Regional Office will advise bidders who
submit high bids of the amount required for EFT payment. Promptly after
notification, the EFT coordinators must instruct their banks to send
via EFT the sum of the 1/5th bonus for all high bids to the appropriate
United States Treasury account. Instructions for making EFT 1/5th bonus
payments are included in the Sale Notice Package. [These procedures/
instructions are consistent with 4/5th bonus and first year rental
payment procedures using EFT.]
Additionally, each EFT coordinator must submit in a separate sealed
envelope accompanying the bids, a single payment for 1/5th of the sum
of all bids submitted by that EFT coordinator for Sale 168, including
joint bids. The lump sum payment(s) in the sealed envelope(s) must be
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. These lump sum payments will be used to secure the
EFT payments. Once the EFT payment in an amount sufficient to cover
that bidder's high bids is credited to the appropriate United States
Treasury account, the lump sum payment accompanying those bids will be
returned. The envelope containing this payment should be in the
following format:

Lump Sum Check Securing EFT Payments
Submitted by: Explorer LTD.
GOM Company No.: 20999

[[Page 39865]]

The EFT payment for 1/5th of the sum of the high bids on blocks
must be received in the appropriate United States Treasury account no
later than noon, Eastern Time, on August 28, 1997, the day after Lease
Sale 168.
If the EFT payments are late or deficient in amount, the lump sum
payments accompanying the bids will be deposited into the appropriate
United States Treasury account. Should these payments (which secure
high bids and unsuccessful bids) require a refund to the bidders, those
refunds, without interest, will be accomplished through EFT as soon as
practicable. No interest payments will be made for unsuccessful bid(s)
returned in this manner.
(b) Submission of Bids in the Northern Portion of the Western Gap.
Procedures for the submission of bids on blocks in this area will
differ from procedures described in paragraph (a) above as follows:
The MMS will receive bids on blocks in the Northern Portion of the
Western Gap. Separate, signed bids on these blocks must be submitted in
sealed envelopes labeled only with ``Northern Portion of Western Gap
Bid'', the Gulf of Mexico Company Number, and a sequential bid number
for the company submitting the bid(s). The envelope would thus be in
the following format:

Northern Portion of Western Gap Bid
GOM Company No.: 20999
Northern Portion of Western Gap Bid number 1

Bidders must submit bids using one of the options described in
paragraph 3(a) above. If the option to use EFT for the 1/5th cash bonus
is selected, each EFT coordinator submitting bids on blocks within the
Northern Portion of the Western Gap must submit, in a separate sealed
envelope accompanying those bids, a single payment for 1/5th of the sum
of all bids on blocks within the Northern Portion of the Western Gap,
including joint bids. The envelope containing this payment should be in
the following format:

Lump Sum Check Securing EFT Payments
Northern Portion of the Western Gap
GOM Company No.: 20999

If the bids on blocks in the Northern Portion of the Western Gap
are not opened, the sealed envelopes containing the lump sum checks
will be returned to EFT coordinators along with the unopened bids.
The EFT payment for 1/5th of the sum of the high bids on blocks
within the Northern Portion of the Western Gap must be received in the
appropriate United States Treasury account no later than noon, Eastern
Time, on the day after opening of bids on these blocks (see paragraph
2(a)(2)).
(c) 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, and type of such data must be clearly identified. In
addition, the statement shall certify that no such data is 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. Companies bidding on blocks in the Northern
Portion of the Western Gap (see paragraph 2(a)) must submit a separate
statement covering any blocks in that area. This statement must be in a
sealed envelope with a label stating that it contains information
regarding blocks in the Northern Portion of the Western Gap. The
following format is recommended:

For Blocks In The Northern Portion Of The Western Gap Only
GOM Company No. 20137
Depth-Migrated Seismic Data Statement
Proprietary Data
Submitted In Conjunction With Oil And Gas Lease Sale 168

This envelope will be opened only if and when bids on blocks in this
area are opened (see paragraph 2(a)). If these bids are not opened, the
sealed envelopes will be returned to the companies who submitted them.
Paragraph 14(j), Information to Lessees, contains additional
information pertaining to geophysical data.
4. Minimum Bid, Yearly Rental, and Bidding Systems. The following
bidding, yearly rental, and royalty systems apply to this sale:
(a) Minimum Bid. 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 ``Lease Terms, Bidding
Systems, and Royalty Suspension Areas, Sale 168'' (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. This map is available from the MMS Gulf of Mexico Regional
Office Public Information Unit (see paragraph 14(a) of this Notice).
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) Bidding 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 Map ``Lease Terms, Bidding Systems, and Royalty
Suspension Areas, Sale 168'' 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).
(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.

[[Page 39866]]

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 ``Lease Terms, Bidding Systems, and Royalty Suspension
Areas, Sale 168'' depicting blocks in which such suspensions may apply
is currently available from the MMS Gulf of Mexico Regional Office
Public Information Unit (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 times
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 high bids, and any EFT payments
made in accordance with Paragraph 3(a)(2) above, will 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 valid 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 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, tracts will be evaluated in
accordance with established MMS bid adequacy procedures. A copy of the
current procedures (``Summary of Procedures for Determining Bid
Adequacy at Offshore Oil and Gas Lease Sales: Effective August 1997,
with Sale 168'') is available from the MMS Gulf of Mexico Regional
Office Public

[[Page 39867]]

Information Unit (see paragraph 14(a) of this Notice).

Please Note: MMS recently made modifications to its process for
bid adequacy determination. These changes affect Sale 168 and were
announced in a Federal Register Notice at 62 FR 37589, dated July
14, 1997, and are included in the Summary document mentioned above
available from the Gulf of Mexico Regional Office Public Information
Unit.

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 EFT 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), (n), and (q), 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
C.F.R., Part 12, Subpart D, as amended in the Federal Register of June
26, 1995, at 60 FR 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 Public Information Unit (see paragraph 14(a)):
(a) OCS Leasing Maps--Texas, Nos. 1 through 8. This is a set of 16
maps which sells for $18.00.
(b) OCS 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 Available for Leasing. 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 the Sale Notice Package
and is currently available from the MMS Gulf of Mexico Regional Office
Public Information Unit (see paragraph 14(a)):
Western Gulf of Mexico Lease Sale 168--Final. 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 and those blocks or
partial blocks listed below. 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 Public Information Unit
(see paragraph 14(a)).
(1) Although 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 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 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.
13. Lease Terms and Stipulations.
(a) Leases resulting from this sale will have initial terms as
shown on the map ``Lease Terms, Bidding Systems, and Royalty Suspension
Areas, Sale 168.'' Copies of the map and lease form are available from
the MMS Gulf of Mexico Regional Office Public Information Unit (see
paragraph 14(a)).
(b) The applicability of the stipulations which follow is as shown
on the map ``Stipulations and Deferred Blocks, Sale 168'' 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 Public Information Unit (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................. 100
(Defined by \1/4\ \1/4\ \1/
4\ system)
East Flower Garden Bank................. 100
(Defined by \1/4\ \1/4\ \1/
4\ system)
MacNeil Bank............................ 82
29 Fathom Bank.......................... 64
Rankin Bank............................. 85
Geyer Bank.............................. 85
Elvers Bank............................. 85
Bright Bank \1\......................... 85
McGrail Bank \1\........................ 85
Rezak Bank \1\.......................... 85
Sidner Bank \1\......................... 85
Parker Bank \1\......................... 85
Stetson Bank............................ 52
Appelbaum Bank.......................... 85
Low Relief Banks: \2\
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 \3\....................... 50
South Texas Banks \4\
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\ Central Gulf of Mexico bank with a portion of its ``1-Mile Zone''
and/or ``3-Mile Zone'' in the Western Gulf of Mexico.
\2\ Low Relief Banks--Only paragraph (a) applies.

[[Page 39868]]

\3\ 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.
\4\ 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.) This restriction on operations also applies to areas
surrounding the Flower Garden Banks National Marine Sanctuary, namely
the ``4-Mile Zone'' surrounding the East Flower Garden Bank and the
West Flower Garden Bank.
(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(b).)
(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 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 at the end of this stipulation.
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) 939-3862/3902
W-602--Headquarters ACC/DOSR, 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 RD, MMS 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 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

[[Page 39869]]

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, S.E., 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 Bill Daughdrill, Chief of Facility and Offshore Compliance
Section, 8th Coast Guard District, Hale Boggs Federal Building, New
Orleans, Louisiana 70130, (504) 589-6901. For COE information,
prospective bidders should contact Mr. Dan Nannings, Chief Evaluation
Section, Regulatory Branch, Post Office Box 1229, Galveston, Texas
77553, (409) 766-3938.
(c) Offshore Pipelines. Bidders are advised that the Department of
the Interior and the Department of Transportation have entered into a
Memorandum of Understanding (MOU), dated December 10, 1996, concerning
the design, installation, operations, inspection, and maintenance of
offshore pipelines. Bidders should consult both Departments for
regulations applicable to offshore pipelines. This recently revised MOU
is available from the MMS Gulf of Mexico Regional Office Public
Information Unit (see paragraph 14(a) of this Notice).
(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. Lessees are advised that they must adhere
to the rules of the Department of Labor, Office of Federal Contract
Compliance, at 41 CFR Chapter 60. Companies with questions regarding
those rules should contact one of the various regional Department of
Labor Offices of Federal Contract Compliance.
(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 referred to the
regulations at 30 CFR 250.26 (Archaeological Reports and Surveys). 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, (56 FR 66076) effective
February 17, 1992, specifies remote sensing instrumentation survey
methodology, linespacing, and archaeological report writing
requirements for lessees and operators in the Gulf of Mexico Region.
Three additional documents are available from the MMS Gulf of Mexico
Regional Office Public Information Unit (see paragraph 14(a)):
``List of Lease Blocks Within the High-Probability Area for
Historic Period Shipwrecks on the OCS'' dated May 22, 1995, (including
an Errata Sheet II dated April 16, 1997). 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 May 22, 1995.
MMS Gulf of Mexico Regional Office Letter to Lessees and Operators
of March 17, 1996, which contains a list of lease blocks within the
High-Probability Areas for both Historic Period Shipwrecks and
Prehistoric Archaeological Resources on the OCS that were formerly
``grandfathered'' but which may now require archaeological surveys.
(h) Proposed Artificial Reefs/Rigs-to-Reefs. Bidders are advised
that there are OCS artificial reef planning and general permit areas,
and reef sites for the Gulf of Mexico. These are located in water
depths of less than 200 meters. While all artificial reef sites require
a permit from the COE, the Artificial Reefs program is implemented
through State sponsorship through the following State Coordinators:

Alabama Mr. Steve Heath, (334) 968-7576
Florida Mr. Jon Dodrill, (904) 922-4340
Louisiana Mr. Rick Kasprzak, (504) 765-2375
Mississippi Mr. Mike Buchanan, (601) 385-5860
Texas Ms. Jan Culbertson, (281) 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 designated certain areas of the Gulf of Mexico (60 FR
45006 of August 29, 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 of 1990 (OPA) 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

[[Page 39870]]

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(c) Method of
Bidding above. MMS 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 has helped MMS in
identifying time data that may have already been in our data base and
at the same time has not imposed undue burden on industry by
rerequesting the data. All requirements are being imposed on a trial
basis to determine their effectiveness and are subject to further
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 (90)
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 Regional Office Public Information Unit (see paragraph
14(a)).
(l) Royalty Relief. The 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 Mr. Walter Cruickshank of the MMS Offshore Minerals Analysis
Division at (202) 208-3822.
A map titled ``Lease Terms, Bidding Systems, and Royalty Suspension
Areas, Sale 168'' depicting blocks in which such suspensions may apply
is currently available from the MMS Gulf of Mexico Regional Office
Public Information Unit (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 Public Information Unit (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/
5\ths 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 paragraphs 3(a)(2) and 10(a) of this Notice.
(o) Deepwater Operations Plans. Bidders are advised that MMS Notice
to Lessees (NTL) 96-4N, which became effective on August 19, 1996,
requires that a Deepwater Operations Plan be submitted for all
deepwater development projects (water depths greater than 304.8 meters
(1,000 feet)) and for all projects utilizing subsea production
technology; projects using conventional fixed-leg projects are exempted
from this requirement. Copies of the NTL may be obtained from the MMS
Gulf of Mexico Regional Office Public Information Unit (see paragraph
14(a) of this Notice).
(p) 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.
(q) New Bonding Requirements. MMS promulgated revisions to the
surety bond program on May 22, 1997 (62 FR 27948): ``Surety Bonds for
Outer Continental Shelf Leases.'' The revisions to the surety bond
program provide for the following:
(1) Establishes December 8, 1997, as the deadline for every lessee
to comply with the bond coverage requirements established in the rule
published August 27, 1993 (58 FR 45255).
(2) Clarifies the MMS position that co-lessees and operating rights
owners are jointly and severally liable for compliance with our
regulations and the terms and conditions of their OCS oil and gas and
sulphur lease for non-monetary obligations.
(3) Clarifies the MMS position that an assignor of an OCS lease
remains responsible for compliance with the lease abandonment
obligations

[[Page 39871]]

associated with wells drilled or used while the assignor was lessee.
(4) Establishes regulatory frameworks for acceptance of lease-
specific abandonment accounts and third-party guarantees.
(5) Sets a higher more realistic level of bond coverage to be
required of the holder of a G&G exploration permit to drill a deep
stratigraphic test well and authorizes a demand for a supplemental bond
from the holder of a G&G permit or pipeline right-of-way.
This rule is the product of MMS efforts to write regulations in
plain English and continues attempts to provide optimum flexibility for
a lessee to meet lease bond requirements and ensure that lessees
adequately fund their end-of-lease obligations.
Objectives for this rule are to: (1) ensure a lessee's financial
capability to perform its lease obligations; (2) protect the
environment from threat of harm that might result from a lessee's
failure to timely carry out proper well abandonment and site clearance
operations; (3) achieve a reasonable degree of protection from default
by a lessee, permittee, or pipeline right-of-way holder at a minimum
increase in costs for lease, permit, or pipeline operations; and (4)
select a method for attaining those goals that equitably affect all
parties.
(r) Proposed Rule: Oil Spill Financial Responsibility for Offshore
Facilities. Bidders should note that MMS published in the Federal
Register a proposed rule to implement a financial responsibility
provision of the Oil Pollution Act of 1990 (OPA). The proposal, which
appears at 62 FR 14052 on March 25, 1997, requires those responsible
for offshore oil facilities to demonstrate that they can pay for
cleanup and damages caused by facility oil spills. The proposed rule
applies to oil exploration, production, and pipeline facilities located
along and seaward of the U.S. coastline. The proposal reflects recent
changes to OPA that more precisely define the scope of the oil spill
financial responsibility requirement in terms of geographic
limitations, types of facilities affected, and the dollar amounts of
responsibility that must be demonstrated. Public comments on the
proposed financial responsibility regulation were due June 23, 1997. A
final regulation should be published by the end of the year.
(s) Final Rule: Response Plans for Facilities Located Seaward of
the Coast Line. Bidders should note that MMS published in the Federal
Register a final rule at 62 FR 13991 on March 25, 1997, to implement
the facility response planning provision of Oil Pollution Act of 1990
(OPA). The rule, which supersedes an interim rule in effect since
February 18, 1993, allows one plan to be used to cover multiple
offshore facilities; thus allowing operators to reduce the cost of
spill response compliance without sacrificing environmental protection.
The final rule also permits the use of the National Response Team's
Integrated Contingency Plan Guidance when preparing a plan for MMS
review. This guidance allows facility owners to consolidate multiple
plans required by various agencies into one functional response plan,
thereby minimizing duplication.

Dated: July 28, 1997.
Cynthia Quarterman,
Director, Minerals Management Service.

Approved:
Bob Armstrong,
Assistant Secretary, Land and Minerals Management.
[FR Doc. 97-19465 Filed 7-23-97; 8:45 am]
BILLING CODE 4310-MR-P

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-19465. Public record. Not legal advice.