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July 23, 2003 --- Vol. 9, No. 72July 2003

MMS slashes bid, rental amounts for sale 186

The Minerals Management Service has dramatically reduced the minimum bid and rental rates for leases to be offered in its upcoming Beaufort Sea oil and gas lease sale. When MMS announced the sale in February, it said the minimum bid would be $62 per hectare, and the annual rental rate $13 per hectare (a hectare is equal to 2.47 acres), rates the agency said are "consistent with past OCS sales in the Alaska Region."

MMS said July 17 in a Federal Register notice that, after further consideration, it is proposing a minimum bid of $37.50 per hectare for Zone A and a minimum bid of $25 per hectare for Zone B. Zone A is the area closest to shore and includes the area from Harrison Bay to Point Thomson; Zone B is the remainder of the sale area, that farther from the coast from east of Barrow to the Canadian border.

The proposed sliding scale rental rates are $7.50 per hectare in Zone A for the first five years, increasing thereafter to $30 per hectare in years nine and 10. The Zone B rental rate is $2.50 per hectare for the first year, increasing each year to $20 per hectare in the 10th year.

MMS said the new biding rates "are designed in part to provide potential bidders the incentive to acquire sufficient acreage to support a timely seismic data acquisition program." The sliding-scale rental terms are "intended to encourage expeditious exploration of domestic energy resources."

The agency said the proposed reductions are being announced now to give potential bidders and other interested parties time to consider the changes in preparing for the lease sale. Comments on the changes close Aug. 1. A final notice of sale, establishing all terms and conditions for sale 186, will be issued at least 30 days before the sale.

Editor's note: See complete story in July 27 issue of Petroleum News.

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