Page images

intent and provisions of the OCS Lands Act. We will continue to consult with the State on issues concerning oil and gas leasing. At this time, there does not appear to be any reason to pursue the idea of a special task force.

Question: It is my understanding that the Department is planning to hold a gold sale offshore Alaska late in 1988 and that this sale is supported by the Alaska delegation and the State.

Is this date overly optimistic given the fact that regulations, fair market value procedures, etc. have not yet been developed?

Answer: Yes, based on an agreement with the State, the OCS minerals lease sale in Norton Sound has recently been rescheduled for the Summer of 1989.

Question: Please provide details on sulphur sale in the Gulf of Mexico.

the Department's recent salt and


The sale was very successful

one. There were 20 bids submitted on 14 mining units. Over 140,000 acres were bid with total high bids exceeding $15 million. of the five companies that qualified, all five submitted bids. A copy of the terms and conditions for the sale follow:




Outer Continental shelf (os)

Notice of Sale
Central Gulf of Mexico
Sulphur and Salt Lease Sale


By publication of the proposed Notice of sale on September 10, 1987, the Department of the Interior provided the public and potential bidders the opportunity to review and comment on the terms and conditions of the proposed cos sulphur and salt lease sale. All comments on the proposed Notice of sale received by the Department were given careful consideration during the development of the final Notice of Sale. Some of these comments indicated an unfamiiiarity with leasing or operating laws and regulations on the part of potential bidders while other conments requested that additional information be made available prior to the holding of the sale. The following discussion addresses these concerns. (a) Operational constraints Concern was expressed that the adoption of the Information to lessees (ITL) clause regarding operational constraints implied that oil and gas operations would be treated preferentially to sulphur operations. The operational constraints ITL clause was developed to address interference with established operations and concerns associated with subsidence caused by sulphur operations. It is not intended to confer preferential treatment on oil and gas operators, but simply to ensure that existing oil and gas operations are not adversely affected by sulphur operations. sulphur lessees will be afforded similar protection from potential interference with their operations which could result from leasing in the future. Section 17(b) of the sulphur lease form reserves the right of the lessor to grant leases for any other minerals within an area leased for sulphur, "except that operations under such leases shall not unreasonably interfere with or endanger operations under this lease." Additionally, the Gulf of Mexico Regional Office of the Minerals Management Service (MMS) will make available to potential lessees information regarding existing oil and gas leases and operations on bidding units included in this sale to ensure that bidders are informed as fully as possible prior to the sale regarding potential constraints on sulphur operations. See paragraph 14 (a) of the Notice. The MMS is available to discuss with interested parties the issues of potential operational constraints and the applicability of operating regulations to sulphur operations. Contact Mr. Price McDonaid, chief, offshore Rules and operations Division, at (703) 648-7813 for information on this matter.


(b) Size of Bidding Units Comments were received stating that the bidding units as configured in the proposed Notice of sale (combinations of 1/4 blocks) do not coincide closely with the potential areal extent of sulphur deposits. Since this configuration could result in a potential lessee acquiring and holding "extraneous" acreage, commenters requested that bidding units be redefined to coincide more closely with the extent of sulphur deposits. Alternatively, camenters noted, provision should be made to allow acreage to be relinquished in 1/16block increments. The MMS arrently lacks data on the exact outline of each prospect and has thus configured bidding units using the larger 1/4-block increments. However, existing regulations (30 CFR 256.76) allow unwanted acreage to be relinquished in 1/16-block increments after leases are awarded. Additional costs might be inarred by a potential lessee anly for the first year's rental an portions of blocks which the lessee deems extraneous and wishes to relinquish. (c) Archaeological Resources Commenters requested that if MS Inows which bidding units may contain archaeological resources and where these resources are located within the unit, this information should be made available prior to the sale. They were concerned that compliance with the archaeological stipulation and procedures to protect archaeological sites may render a lease useless by preciuding immediate development in the most desirable areas. The MyS does not have sufficiently specific information regarding the presence, location, or characteristics of archaeological resources to

indicate that deferral of any of the bidding units is warranted. Leasing of these units with the archaeological resources stipulation will provide for exploration and potential sulphur production while ensuring that adequate steps are taken to preserve archaeological resources. Of the 51 bidding units included in the sale, 12 have a low probability of archaeological resarse coaurrence and would not likely be subject to the survey requirement of the stipulation. These bidding units are 2, 9, 19, 37, 40, 42 through 46, 49, and 51. A portion of bidding unit number 48 (MPSE 295) also has a low probability of archaeological resource occurrence and would not require a survey. Portions of bidding units 7(EC 178 and 185N/2), 15(VR 226), and 39 (ST 160SW/4) have been cleared by previous archaeological surveys and would not require further surveys. Three whole bidding units (1, 12, and 47) and portions of bidding units 3(EC 104), 11 (VR 162), 14 (VR 2041W/4), 16(S08), 20(ET 76), 21(EI 94; law/4; 111N/2), 22(EI 1168/2: 129A), 25(E 172), 26(EI 190; 191), and 29 (EI 253N/2) have also had archaeological surveys. However, the results of surveys on these blocks indicate that potential lessees would be required to implement a mitigation plan prior to conducting exploration or development activities on certain portions of these blocks. A mitigation plan may involve the avoidance of a potential archaeological resource (indicated by


an anomaly or other information on an archaeological survey record) or the conduct of a more detailed survey to determine whether such a potential archaeological resource actually exists and whether a proposed operation could proceed without adversely affecting the resource. The remaining whole and partial bidding units have not been surveyed. Archaeological surveys will be required of the lessee on these bidding units. These surveys will serve as the basis for determining whether mitigation plans will be required. Upon request by potential bidders, additional information regarding completed surveys and survey requirements will be made available by the Gulf of Mexico Regional Office prior to the lease sale. such requests will be treated as proprietary to protect against disclosing information about the potential bidder's interest in specific areas. See paragraph 14 (a) of the Notiæ. (d) Sulphur and Salt Regulations Commenters expressed concem about the arrent lack of separate regulations for sulphur operations. Sulphur leasehold activities in the ocs are arrently managed by requiring compliance with the regulations in 30 CFR Part 250, Ocs Order No. io for the Gulf of Mexico Region, and review of Boploration and Development and Production Plans on a case-by-case basis. mis approach has been an effective means of providing for safety in operations and protection of the environment. The MMS issued a notice of proposed rulemaking on March 18, 1986 (51 FR 9316), to consolidate, update, and restructure rules governing oil, gas, and sulphur operations in the ocs. All comments received regarding the proposed rulemaking, including concerns that sulphur operations should be covered by separate, specific regulations, have been considered in the development of final rulemaking. Final rules are anticipated to be published prior to the sulphur lease sale. Sulphur operations will continue to be managed by requiring compliance with ocs Order No. 10 and regulations in 30 CFR Part 250 until final rulemaking is, in fact, complete. The MMS is available to discuss with interested parties the rulemaking process and to answer any questions regarding the applicability of existing regulations to sulphur operations. See paragraph (a) of this preamble.

(e) Royalty an Salt In the proposed Notice, interested parties were invited to comment on an appropriate royalty rate for salt sold off lease. Comments ranged from precluding salt from being sold off lease condition the leases so that salt could only be used in the sulphur production process on lease to a nominal royalty rate. The Department has selected a royalty rate of 5 percent for salt taken off lease, consistent with the royalty rate charged for Federal salt leases issued in New Mexico in 1984 and in California in 1985. No royalty is charged for salt employed to produce sulphur on the lease. See paragraph 4 of this Notice.





Outer Continental shelf

Notia of Sale
Central que of Mexico
-Sulphur and Salt Lease Sale

1. Authority. This Notia is published pursuant to the ater Continental shall (as) Lands Act (43 U.S.c. 1331-1356, (1982)), as amended by the OCS Lands Act Amendments of 1985 (100 Stat. 147), and the regulations issued therunder (30 WR Part 256).

2. puling of Bids. Sealed bids will be noaived by the Regional Director (RD), Gull of Messico Region, Minerals Management Service (448), 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.a.) until the Bid Submission Deadline at 10 a.m., February 23, 1988. Herainatter, all times cited in this Notic rater to Central Standard Time (c.s.t.) unless otherwise stated. Bids will not be accepted the day of Bid Opening, February 24, 1988. Bids received by the RD later than the time and date cocitied above will be returned unopened to the bidders. Bids may not be modified unleas written modification is received by the RD prior to 10 a.m., February 23, 1988. Bids may not be withdrawn unless written withdrawal is rooived by the RD prior to 8:30 a.m., February 24, 1988. Bid Opening time will be 9 a.n., February 24, 1988, at the cult of Medico Regional otria, First Floor Conference Room (Room 101), 1201 Elmwood Park Boulevard, New Orleans, Louisiana. All bids must be submitted and will be considered in accordance with applicable regulations, including 30 CFR Part 256.

3. Method of Bidding. A separate bid in a sealed envelope labeled "Sealed Bid for Sulphur and salt Leasa Sale (bidding unit number, map number, nep name, and block number(s)), not to be opened until 9 a.m., c.s.t., February 24, 1988," must be submitted for each prescribed bidding unit bid upon. it is nocoumended that all numbers of blocks and applicable portions (as described in paragraph 12) comprising the bidding unit appear on the sealed anvelopa. A bid foon for this sale is available from the Gulf of Medico Regional orria as provided in paragraph 14(a). In addition, the total amount bid must be in whole dollar amounts (no cents). Bidders must submit with each bid an-listh of the cash bonus, in cash or by cashier's check, bank draft, or artified check, payable to the order of the U.S. Department of the Interior Minerals Management service. No bid for less than all of any bidding unit as described in paragraph 12 will be considered. AU documents must be executed in conformance with signatory authorizations on tule. Partnerships also need to submit or have an eile in the out of Mexico Regional offia 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 maximm of five decimal places after the decimal point, e.g., 50.12345 percent. Other documents may be required of bidders under 30 CPR 256.46. Bidders are warned against violation of 18 U.S.C. 1860, prohibiting unlawtul combination or intimidation of bidden.

« PreviousContinue »