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MMS seeking interest in Chukchi Sea Agency considering incentives, offered for the first time in Alaska in September’s Beaufort Sea OCS sale Kristen Nelson Petroleum News Editor-in-Chief
If we held a lease sale, would anyone come?
That’s the question the Minerals Management Service is posing to oil and gas companies about the Chukchi Sea northwest of Alaska and the Hope and Norton basins west of Alaska’s Seward Peninsula.
“The Chukchi Sea and Norton Basin have great potential as sources of oil or gas but the accompanying high economic cost due to the distance from any infrastructure make them challenging areas to lease,” said MMS Alaska Regional Director John Goll.
“Our objective through this ‘special interest’ process is to see whether any companies are interested at this time to explore these frontier areas. If they are, we can design a sale. If no one expresses interest, we save a lot of work and money,” he said Jan. 30.
The agency published a call for information and nominations in the Federal Register, seeking comments on proposals from industry and the public. MMS requests that industry nominate small, very specific areas where they are willing to commit to exploration.
This would be the first step in the special 18-month leasing process for federal outer continental shelf tracts in frontier agencies.
MMS said it “is considering offering economic incentives similar to those offered recently in the Beaufort Sea Sale 186 held in September 2003.”
The agency said it will used information received to make a decision on whether or not to proceed with leasing, and if there is no interest this year, it will postpone the sales and ask for leasing interest in the areas again next year. If a company is interested in one of the areas, MMS would then ask them to identify the area of interest. The areas open for nominations are relatively large, MMS said, and “the purpose of this ‘special interest’ process is to identify and offer only small focused areas in these federal waters where industry has a significant interest in exploration.”
Nominations and comments are due by April 29. First Alaska incentives in September’s Beaufort Sea OCS sale MMS offered incentives for the first time in an Alaska outer continental shelf lease sale in its Beaufort Sea last September. In addition to reduced minimum bid amounts and sliding scale rentals, the agency offered royalty suspension for first oil production, with suspension volumes varying by sale zone.
Economic incentives are also being offered for the first time in Cook Inlet OCS lease sale 191, tentatively scheduled for May 19: a longer primary lease term of eight years; lower minimum bid ($25 per hectare) and annual rental rates ($5 per hectare); and royalty suspension volumes, which would relieve royalty payments on a producing lease for the first 30 million barrels of oil equivalent, applied to both oil and natural gas, with price floor and ceiling thresholds.
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