Outer Continental Shelf, Central Gulf of Mexico, Oil and Gas Lease Sale 166Final Notice of Sale

DEPARTMENT OF THE INTERIOR

Outer Continental Shelf, Central Gulf of Mexico, Oil and Gas

Lease Sale 166--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, as amended) and

the regulations issued thereunder (30 CFR Part 256).

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, March 4, 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, March 5,

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modified or withdrawn unless written modification or written withdrawal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, March 4, 1997.

Bid Opening Time will be 9 a.m., Wednesday, March 5, 1997, at the Hyatt

Regency Hotel, 500 Poydras Plaza, 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 54213, published on October 17, 1996.

(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, March 4, 1997, bids will be

accepted until 9 a.m. Wednesday, March 5, 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or withdrawn upon written notification up until 9 a.m. Wednesday, March

5, 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.

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

labeled ``Sealed Bid for Oil and Gas Lease Sale 166, not to be opened

until 9 a.m., c.s.t., Wednesday, March 5, 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), area number (e.g., LA1 for West Cameron, NH16-04

for Mobile), area 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 1/5th 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). 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

[[Page 4790]]

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(k), 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 Central Gulf Of Mexico (March 1996)'' (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 (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) 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).

(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 Central 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

[[Page 4791]]

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(m), 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 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(n) and (o), 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 Office (see paragraph 14(a)):

(a) Outer Continental Shelf (OCS) Leasing Maps--Louisiana Nos. 1

through 12. This is a set of 30 maps which sells for $32.

(b) Outer Continental Shelf Official Protraction Diagrams. These

diagrams sell for $2.00 each.

NH 15-12 Ewing Bank (rev. 12/02/76).

NH 16-4 Mobile (rev. 02/23/93).

NH 16-7 Viosca Knoll (rev. 12/02/76).

NH 16-10 Mississippi Canyon (rev. 05/01/96).

NG 15-3 Green Canyon (rev. 12/02/76).

NG 15-6 Walker Ridge (rev. 12/02/76).

NG 15-9 (No Name) (rev. 04/27/89).

NG 16-1 Atwater Valley (rev. 11/10/83).

NG 16-4 Lund (rev. 08/22/86).

NG 16-7 (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 (see paragraph 14(a)): Central Gulf

of Mexico Lease Sale 166--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 Central 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)).

[[Page 4792]]

Although currently unleased, the following tracts are currently

under appeal and therefore unavailable for leasing: Main Pass Area,

South and East Addition, Blocks 253 and 254.

Although currently unleased, the following tracts are not offered

in this sale: Mobile Area, Blocks 826 and 829.

Note: As noted in the Final Notices of Sales for Sale 157 and

161, 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. 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 Gulf of Mexico Regional Office

(see paragraph 14(a)).

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

the Central Gulf are:

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

No activity

zone defined

Bank name by Isobath

(meters)

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

McGrail Bank............................................ 85

Bouma Bank.............................................. 85

Rezak Bank.............................................. 85

Sidner Bank............................................. 85

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

Sackett Bank \2\........................................ 85

Ewing Bank.............................................. 85

Diaphus Bank \2\........................................ 85

Parker Bank............................................. 85

Jakkula Bank............................................ 85

Sweet Bank \1\.......................................... 85

Bright Bank............................................. 85

Geyer Bank \3\.......................................... 85

MacNeil Bank \3\........................................ 82

Alderdice Bank.......................................... 80

Fishnet Bank \2\........................................ 76

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

Sonnier Bank............................................ 55

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

\1\ Only paragraph (a) of the stipulation applies.

\2\ Only paragraphs (a) and (b) apply.

\3\ Western Gulf of Mexico bank with a portion of its ``3-Mile Zone'' in

the Central Gulf of Mexico.

(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--Live Bottoms

(To be included only on leases in the following blocks: Main Pass

Area, South and East Addition, Blocks 190, 194, 198, 219-226, 244-266,

276-290; Viosca Knoll, Blocks 473-476, 521, 522, 564, 565, 566, 609,

610, 654, 692-698, 734, 778.)

For the purpose of this stipulation, ``live bottom areas'' are

defined as seagrass communities; or those areas which contain

biological assemblages consisting of such sessile invertebrates as sea

fans, sea whips, hydroids, anemones, ascidians, sponges, bryozoans, or

corals living upon and attached to naturally occurring hard or rocky

formations with rough, broken, or smooth topography; or areas whose

lithotope favors the accumulation of turtles, fishes, and other fauna.

Prior to any drilling activities or the construction or placement

of any structure for exploration or development on this lease,

including, but not limited to, anchoring, well drilling, and pipeline

and platform placement, the lessee will submit to the Regional Director

(RD) a live bottom survey report containing a bathymetry map prepared

utilizing remote sensing techniques. The bathymetry map shall be

prepared for the purpose of determining the presence or absence of live

bottoms which could be impacted by the proposed activity. This map

shall encompass such an area of the seafloor where surface disturbing

activities, including anchoring, may occur.

If it is determined that the live bottoms might be adversely

impacted by the proposed activity, the RD will require the lessee to

undertake any measure deemed economically, environmentally, and

technically feasible to protect the pinnacle area. These measures may

include, but are not limited to, the following:

(a) The relocation of operations; and

(b) The monitoring to assess the impact of the activity on the live

bottoms.

Stipulation No. 3--Military Areas

(This stipulation will be included in leases located within the

Warning Areas and Eglin Water Test Areas 1 and 3, 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

[[Page 4793]]

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-155A and B (For Agreement)--Chief, Naval Air Training, Naval Air

Station, Office No. 206, Corpus Christi, Texas 78419-5100, Telephone:

(512) 939-3862/2621

W-155A and B (For Operational Control)--Fleet Area Control &

Surveillance Facility (FACSFAC), Operations, Naval Air Station,

Pensacola, Florida 32508, Telephone: (904) 452-2735/4671

W-92--Naval Air Station, Air Operations Department, Air Traffic

Division/Code 52, New Orleans, Louisiana 70146-5000, Telephone: (504)

393-3100/3101

W-453--Air National Guard--CRTC/ACTS, Scheduling Office, 4715 Hews

Avenue Building 1, Gulfport, Mississippi 39507, Telephone: (601) 867-

2432/2433

Eglin Water Test Areas 1 and 3--Air Force Development Test Center,

Strategic Plans Division AFDTC/DRP, 101 West ``D'' Avenue, Suite 125,

Eglin AFB, Florida 32542-5495, Telephone: (904) 882-3899/4188

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 Office,

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, and the Deepwater Port

Act (33 U.S.C. 1501-1524). Bidders are advised to review U.S. Coast

Guard regulations (particularly 33 CFR Part 150, Appendix A; see also

59 FR 17480 published on April 13, 1994) regarding the safety zone

around the Louisiana Offshore Oil Port (LOOP).

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. Ron Ventola CELMN-OD-S, Post Office Box 60267, New Orleans,

Louisiana 70160-0267, (504) 862-2255.

(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 December 10, 1976, concerning the

design, installation, operations, inspection, 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 Mississippi

Canyon area, shown on the map described in paragraph 13(a). These areas

were used to dispose of ordnance of unknown quantity and composition.

Water depths range from approximately 750 to 1,525 meters. Bottom

sediments in both areas are soft, consisting of silty clays.

Exploration and development activities in these areas require

[[Page 4794]]

precautions commensurate with the potential hazards.

The U.S. Air Force has released an indeterminable amount of

unexploded ordnance throughout Eglin Water Test Areas 1 and 3. The

exact location of the unexploded ordnance is unknown, and lessees are

advised that all lease blocks included in this sale within these water

test areas should be considered potentially hazardous to drilling and

platform and pipeline placement.

(g) Communications Towers. The Department of Defense, U.S. Air

Force, has installed seven military communications towers in the

Chandeleur/Mobile/Viosca Knoll area which support Air Combat

Maneuvering Instrumentation (ACMI). This project may impose certain

restrictions on oil and gas activities in that area since no activity

can take place within 500 feet of a tower site, and unobstructed lines

of sight must be maintained between towers. The seven towers are

located within Mobile, Blocks 769, 819, and 990; Viosca Knoll, Block

116; Chandeleur Area, Blocks 33 and 61; and Chandeleur Area, East

Addition, Block 39. Information and maps of the specific locations and

line of sight crossings for ACMI towers may be obtained from Mr.

Wallace Williams, Minerals Management Service, (504) 736-2772.

(h) 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 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

(including an Errata Sheet dated January 15, 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 January 30,

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.

(i) Proposed Artificial Reefs/Rigs to Reefs. Bidders are advised

that there are OCS artificial reef planning areas and reef sites for

the Gulf of Mexico. These are generally located in water depths of less

than 200 meters. While all artificial reef sites require a permit from

the U.S. Army Corps of Engineers, 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.

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

(k) 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 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 not imposed undue

burden on industry by re-requesting it. MMS is currently considering

further modifications to the above procedures that would aid in the

identification of the data extent and at the same time hasten the

procurement and reimbursement processes to bidders who furnish MMS with

data. These changes will be available in April 1997 with the issuance

of the Proposed Notice of Sale for Western Gulf Sale 168, scheduled for

August 1997. 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 Office (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.

(l) Information about Indicated Hydrocarbons. Bidders are advised

that

[[Page 4795]]

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 Office (see paragraph 14(a)).

(m) 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 Central 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).

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).

(n) 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.

(o) 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 paragraph 10(a) of this Notice.

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

Cynthia Quarterman,

Director, Minerals Management Service.

Approved: January 24, 1997.

Sylvia V. Baca,

Deputy Assistant Secretary, Land and Minerals Management.

[FR Doc. 97-2334 Filed 1-30-97; 8:45 am]

BILLING CODE 4310-MR-P