The U.S. Minerals Management Service (MMS) has published the final sale notice of the Western Gulf of Mexico Sale 184. The sale offers several initiatives to increase domestic natural gas and oil production, one applying to shallow-water deep gas production. In this case, a lease in less than 200 m of water that begins production from a new deep gas reservoir, 15,000 ft or greater subsea, within five years from lease issuance will receive a royalty suspension on the first 20 bcf of its deep gas production. Deepwater royalty relief will affect tracts in water depths 400 m or deeper. Individual leases will enjoy specific terms for royalty relief, but leases that fall under the Deep Water Royalty Relief Act of 1995 do not qualify. Royalty suspension volumes are 5 Boe in 400 m - 799 m water depths; 9 MMBoe in water depths of 800 m - 1,599 m; and 12 MMBoe in 1,600 m water depths or deeper. Under the terms of this leasing system, lessees are allowed to produce these volumes before any royalty obligations are due.
Sale 184 encompasses 4,102 unleased blocks, about 22.3 million acres, in the western GoM Outer Continental Shelf planning area offshore Texas and in deeper waters offshore Louisiana. The blocks are 9 - 250 miles offshore in water depths ranging from 8 m to more than 3,000 m. The MMS estimates of 10 - 90 MMbbl and 0.57 - 1.93 tcf of undiscovered economically recoverable hydrocarbons in this area. There are 1,873 blocks in water depths of 800 m or more.
