[Federal Register Volume 73, Number 1 (Wednesday, January 2, 2008)]
[Notices]
[Pages 209-214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-6226]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service (MMS)


Outer Continental Shelf (OCS) Chukchi Sea Alaska, Oil and Gas 
Lease Sale 193

AGENCY: Minerals Management Service, Interior.

ACTION: Final Notice of Sale (FNOS), OCS Oil and Gas Lease Sale 193, 
Chukchi Sea.

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SUMMARY: The MMS will hold OCS Oil and Gas Lease Sale 193 on February 
6, 2008, in accordance with provisions of the OCS Lands Act (43 U.S.C. 
1331-1356, as amended), the implementing regulations (30 CFR 256), and 
the OCS Oil and Gas Leasing Program 2007-2012.

DATES: Lease Sale 193 is scheduled to be held on February 6, 2008, at 
the Wilda Marston Theatre, Z. J. Loussac Public Library, 3600 Denali 
Street, Anchorage, Alaska. Public reading will begin at 9 a.m. All 
times referenced in this document are local Anchorage, Alaska, times, 
unless otherwise specified.

ADDRESSES: A package containing the FNOS and several supporting and 
essential documents referenced herein is available from: Alaska OCS 
Region, Minerals Management Service, 3801 Centerpoint Drive, Suite 500, 
Anchorage, Alaska 99503-5823, Telephone: (907) 334-5200 or 1-800-764-
2627.
    These documents are also available on the MMS Alaska OCS Region's 
Web page at http://www.mms.gov/alaska.
    Bid Submission Deadline: Bidders will be required to submit sealed 
bids to MMS at the Alaska OCS Region Office, 3801 Centerpoint Drive, 
Suite 500, Anchorage, Alaska 99503, by 10 a.m. on the day before the 
sale, Tuesday, February 5, 2008. If bids are mailed, the envelope 
containing all of the sealed bids must be marked as follows:
    Attention: Mr. Fred King, Contains Sealed Bids for Sale 193.
    If bids are received later than the time and date specified above, 
they will be returned unopened to the bidders. Bidders may not modify 
or withdraw their bids unless the Regional Director, Alaska OCS Region, 
receives a written modification or written withdrawal request prior to 
10 a.m., Tuesday, February 5, 2008. Should an unexpected

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event such as an earthquake or travel restrictions be significantly 
disruptive to bid submission, the Alaska OCS Region may extend the Bid 
Submission Deadline. Bidders may call (907) 334-5200 for information 
about the possible extension of the Bid Submission Deadline due to such 
an event.
    Area Offered for Lease: The MMS is offering for lease all whole and 
partial blocks listed in the document ``Blocks Available for Leasing in 
OCS Oil and Gas Lease Sale 193'' included in the FNOS 193 package. All 
of these blocks are shown on OCS Official Protraction Diagrams, and in 
some cases on Supplemental Official OCS Block Diagrams. The following 
OCS Official Protraction Diagrams pertain to the Sale 193 area and are 
available at http://www.mms.gov/ld/alaska.htm.
    <bullet> NS 02-08, Unnamed, revised December 31, 1994
    <bullet> NS 03-07, Unnamed, revised December 31, 1994
    <bullet> NS 03-08, Unnamed, revised December 31, 1994
    <bullet> NS 04-07, Unnamed, revised December 31, 1994
    <bullet> NS 04-08, Unnamed, revised December 31, 1994
    <bullet> NR 02-02, Tison, revised December 31, 1994
    <bullet> NR 03-01, Karo, revised December 31, 1994
    <bullet> NR 03-02, Posey, revised December 31, 1994
    <bullet> NR 04-01, Hanna Shoal, revised September 30, 1997
    <bullet> NR 04-02, Barrow, revised September 30, 1997
    <bullet> NR 02-04, Studds, revised December 31, 1994
    <bullet> NR 03-03, Colbert, revised December 31, 1994
    <bullet> NR 03-04, Solivik Island, revised September 30, 1997
    <bullet> NR 04-03, Wainwright, revised September 30, 1997
    <bullet> NR 02-06, Chukchi Sea, revised December 31, 1994
    <bullet> NR 03-05, Point Lay West, revised September 30, 1997
    A listing of blocks included in the sale is available at the MMS 
office listed above. The locator map (available at http://www.mms.gov/alaska) may assist you in locating a particular block, but it should 
not be used for the official description of blocks available for lease. 
The OCS Official Protraction Diagrams constitute the official 
descriptions of the areas offered.
    Note that block numbers may repeat between OCS Official Protraction 
Diagrams (OPD's). To uniquely describe a lease tract, you must 
reference both the OPD number and name and the block number.
    Statutes and Regulations: Each lease issued in the lease sale is 
subject to the OCS Lands Act of August 7, 1953, 67 Stat. 462; 43 U.S.C. 
1331, et seq., as amended (92 Stat. 629), hereinafter called ``the 
Act''; all regulations issued pursuant to the Act and in existence upon 
the effective date of the lease; all regulations issued pursuant to the 
statute in the future which provide for the prevention of waste and 
conservation of the natural resources of the OCS and the protection of 
correlative rights therein; and all other applicable statutes and 
regulations.
    Lease Terms and Conditions: The following lease terms and condition 
apply:
    Initial Period: 10 years.
    Minimum Bonus Bid Amounts: $25.00 per hectare, or a fraction 
thereof, for all blocks. Refer to the Final Notice of Sale, Chukchi Sea 
Sale 193 map, and the Summary Table of Minimum Bids, Minimum Royalty 
Rates, and Rental Rates shown below.
    Rental Rates: The Lessee shall pay the Lessor, on or before the 
first day of each lease year which commences prior to a discovery in 
paying quantities of oil or gas on the leased area, a rental at the 
rate shown below in the Summary Table of Minimum Bids, Minimum Royalty 
Rates, and Rental Rates. During the time period in which a lease is 
classified as producible, i.e., following a discovery in paying 
quantities, but before royalty-bearing production begins, a rental of 
$13 per hectare or fraction thereof, applies and is paid at the end of 
each lease year until the start of royalty-bearing production.
    Minimum Royalty Rates: After the start of royalty-bearing 
production and notwithstanding any royalty suspension which may apply, 
the Lessee shall pay the Lessor a minimum royalty of $13 per hectare, 
or fraction thereof, to be paid at the expiration of each lease year 
with credit applied for actual royalty paid during the lease year. If 
actual royalty paid exceeds the minimum royalty requirement, then no 
minimum royalty payment is due.
    Royalty Rates: A 12\1/2\ percent royalty rate will apply for all 
blocks.

 Summary Table of Minimum Bids, Minimum Royalty Rates, and Rental Rates
------------------------------------------------------------------------
 
------------------------------------------------------------------------
             Terms (values per hectare or fraction thereof)
------------------------------------------------------------------------
Royalty Rate............................................  12\1/2\% fixed
Minimum Bonus Bid.......................................          $25.00
Minimum Royalty Rate....................................           13.00
Rental Rates:
    Year 1..............................................            2.50
    Year 2..............................................            3.75
    Year 3..............................................            5.00
    Year 4..............................................            6.25
    Year 5..............................................            7.50
    Year 6..............................................           10.00
    Year 7..............................................           12.00
    Year 8..............................................           15.00
    Year 9..............................................           17.00
    Year 10.............................................           20.00
------------------------------------------------------------------------

    Royalty Suspension: Royalty suspension, prorated by lease acreage 
and subject to price thresholds, will apply to all blocks. In 
accordance with applicable regulations at 30 CFR 260, the following 
royalty suspension provisions will apply to leases issued as a result 
of Chukchi Sea Oil and Gas Lease Sale 193. In addition to these Royalty 
Suspension Provisions, please refer to 30 CFR 218.151 and applicable 
parts of 260.120-260.124 for regulations on royalty suspensions and 
rental obligations that will apply to your lease.
    1. A lease in the Chukchi Sea, depending on surface area, will 
receive a royalty suspension volume (RSV) as follows:

------------------------------------------------------------------------
                                                           RSV  (million
                 Lease size  (hectares)                   barrels of oil
                                                            equivalent)
------------------------------------------------------------------------
Less than 771...........................................              10
771 to less than 1,541..................................              20
1,541 or more...........................................              30
------------------------------------------------------------------------

    2. Natural gas must be measured in accordance with 30 CFR 203.73.
    3. Each lessee must pay royalty on production that might otherwise 
receive royalty relief (in 30 CFR 260) for any calendar year during 
which the actual New York Mercantile Exchange (NYMEX) annual price for 
the light sweet crude oil or natural gas exceeds the threshold price 
($39 per barrel of oil or $6.50 per million British thermal units (Btu) 
of gas, adjusted for inflation) in that year. Such production will be 
deducted from the remaining RSV. The actual NYMEX annual price for the 
commodity is defined as the arithmetic average of the daily closing 
prices for the ``nearby delivery month'' on the NYMEX in a calendar 
year. The actual NYMEX annual price for the commodity is calculated by 
averaging the commodity daily closing prices for each month in the 
year, and then averaging the 12 monthly averages.
    (a) The threshold price in any year, say year t, is determined by 
inflating the base year 2004 price of $39 per barrel of oil or $6.50 
per million Btu of gas. This base year price is modified by the

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percentage change in the implicit price deflator as reported by the 
U.S. Department of Commerce, Bureau of Economic Analysis, for the 
interval between 2004 and year t, resulting in the adjusted threshold 
price for year t. For example, if the deflator indicates that inflation 
is 1.6 percent in 2005, 2.1 percent in 2006, 2.5 percent in 2007, and 
2.5 percent for 2008, then the threshold price in calendar year 2008 
would become $42.50 per barrel of oil and $7.08 per million Btu of gas. 
Therefore, royalty on oil production in calendar year 2008 would be due 
if the 2008 actual NYMEX oil price, as calculated above, exceeds $42.50 
per barrel. The royalty on gas production in calendar year 2008 would 
be due if the 2008 actual NYMEX gas price, as calculated above, exceeds 
$7.08 per million Btu.
    (b) Royalties on production, when the actual NYMEX annual price of 
the commodity exceeds the threshold price in any calendar year, must be 
paid no later than 90 days after the end of that calendar year. (See 30 
CFR 260.122(b)). Also, when the actual NYMEX annual price of the 
commodity exceeds the threshold price in any calendar year, royalties 
on production must be provisionally paid in the following calendar 
year. (See 30 CFR 260.122(c)).
    4. In the case of a Sale 193 lease that is part of an approved unit 
agreement, allocated production from the unit can only apply against 
the lease's RSV if that lease is included in an approved participating 
area. The RSV will be applied to each lease consistent with the 
production allocation schedule approved by the MMS for the 
participating area. Participating area means all or parts of unit 
tracts described and designated as a Participating Area under the unit 
agreement for the purposes of allocating one or more unitized 
substances produced from a reservoir.
    5. A lessee must resume paying full royalties on the first day of 
the month following the month in which the RSV is exhausted. Lessees do 
not owe royalties for the remainder of the month in which the RSV is 
exhausted, unless the actual NYMEX annual price of the commodity 
exceeds the threshold price for that year.
    6. The MMS will provide notice when the actual NYMEX annual price 
of the commodity is above the threshold price. Information on actual 
and threshold prices can be found at the MMS Web site (www.mms.gov/econ).
    Stipulations and Information to Lessees: The documents entitled 
``Final Lease Stipulations'' and ``Final Information to Lessees'' for 
Oil and Gas Lease Sale 193 contain the text of the Final Stipulations 
and the Information to Lessees clauses. These documents are included in 
the FNOS 193 package.
    As required by the MMS, each company that has been awarded a lease 
must execute all copies of the lease (Form MMS-2005 (March 1986) as 
amended), pay by electronic funds transfer (EFT) the balance of the 
bonus bid amount and the first year's rental for each lease issued in 
accordance with the requirements of 30 CFR 218.155, and satisfy the 
bonding requirements of 30 CFR 256, subpart I, as amended.
    Debarment and Suspension (Nonprocurement): In accordance with 
regulations pursuant to 2 CFR, part 180, and 2 CFR, part 1400, the 
lessee shall comply with the U.S. Department of the Interior's 
nonprocurement debarment and suspension requirements and agree to 
communicate this requirement to comply with these regulations to 
persons with whom the lessee does business as it relates to this lease 
by including this term as a condition to enter into their contracts and 
other transactions. Execution of the lease, which includes an Addendum 
specific to debarment, by each lessee constitutes notification to the 
MMS that each lessee is not excluded, disqualified, or convicted of a 
crime as described in 2 CFR 180.335, unless the lessee has provided a 
statement disclosing information as described in 2 CFR 180.335, and the 
MMS receives an exception from the U.S. Department of the Interior as 
described in 2 CFR 180.135 and 180.400.
    Method of Bidding: For each block bid upon, a bidder must submit a 
separate signed bid in a sealed envelope labeled ``Sealed Bid for Oil 
and Gas Lease Sale 193, not to be opened until 9 a.m., Wednesday, 
February 6, 2008.'' The total amount of the bid must be in whole 
dollars; any cent amount above the whole dollar will be ignored by MMS. 
Details of the information required on the bid(s) and the bid 
envelope(s) are specified in the document ``Bid Form and Envelope'' 
contained in the FNOS 193 package.
    Restricted Joint Bidders: The MMS published a list of restricted 
joint bidders, which applies to this sale, in the Federal Register at 
72 FR 64088 on November 14, 2007. 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, i.e. 33.33333 
percent. The MMS may require bidders to submit additional documents in 
accordance with 30 CFR 256.46. The MMS warns bidders against violation 
of 18 U.S.C. 1860 prohibiting unlawful combination or intimidation of 
bidders. Bidders must execute all documents in conformance with 
signatory authorizations on file in the Alaska OCS Region. Partnerships 
also must submit or have on file a list of signatories authorized to 
bind the partnership. Bidders are advised that MMS considers the signed 
bid to be a legally binding obligation on the part of the bidder(s) to 
comply with all applicable regulations, including paying the one-fifth 
bonus bid amount on all high bids. A statement to this effect must be 
included on each bid (see the document ``Bid Form and Envelope'' 
contained in the FNOS 193 package).
    Bonus Bid Deposit: Each bidder submitting an apparent high bid must 
submit a bonus bid deposit to the MMS equal to one-fifth of the bonus 
bid amount for each such bid. Under the authority granted by 30 CFR 
256.46(b), MMS will require bidders to use EFT procedures for payment 
of the one-fifth bonus bid deposits for Sale 193. Payment of the 
deposit will be due by 1:00 p.m. Eastern Time the day following bid 
reading. Detailed bid deposit procedures for Sale 193 will be found 
within the ``Instructions for Making EFT Bonus Payments'' document on 
the MMS Web site.

    Note: Certain bid submitters [i.e., those that are not currently 
an OCS mineral lease record title holder or designated operator or 
those that have ever defaulted on a one-fifth bonus payment (EFT or 
otherwise)] are required to guarantee (secure) their one-fifth bonus 
payment prior to the submission of bids. For those who must secure 
the EFT one-fifth bonus payment, one of the following options may be 
used: (1) Provide a third-party guarantee; (2) Amend bond coverage; 
(3) Provide a letter of credit; or (4) Provide a lump sum payment in 
advance via EFT. The EFT instructions specify the requirements for 
each option.

    Payment of the deposit does not constitute and shall not be 
construed as acceptance of any bid on behalf of the United States. If a 
lease is awarded, MMS requests that only one transaction be used for 
payment of the four-fifths bonus bid amount and the first year's 
rental.
    Withdrawal of Blocks: The United States reserves the right to 
withdraw any block from this sale prior to issuance of a written 
acceptance of a bid for the block.
    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 block will be awarded to any bidder, 
unless the bidder has complied with all requirements of this Notice, 
including the documents

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contained in the associated FNOS package for Sale 193 and applicable 
regulations; the bid is the highest valid bid; and the amount of the 
bid has been determined to be adequate by the authorized officer. The 
Attorney General of the United States may also review the results of 
the lease sale prior to the acceptance of bids and issuance of leases. 
Any bid submitted that does not conform to the requirements of this 
Notice; the OCS Lands Act, as amended; or applicable regulations may be 
returned to the person submitting that bid by the Regional Director and 
not considered for acceptance. To ensure that the Government receives a 
fair return for the conveyance of lease rights for this sale, high bids 
will be evaluated in accordance with MMS bid adequacy procedures.
    Successful Bidders: As required by MMS, each company that has been 
awarded a lease must execute all 3 copies of the lease (Form MMS-2005 
(March 1986) as amended), pay by EFT the balance of the bonus bid 
amount and the first year's rental for each lease issued in accordance 
with the requirements of 30 CFR 218.155, and satisfy the bonding 
requirements of 30 CFR 256, Subpart I.
    Affirmative Action: MMS requests that, prior to bidding, Equal 
Opportunity Affirmative Action Representation Form MMS 2032 (June 1985) 
and Equal Opportunity Compliance Report Certification Form MMS 2033 
(June 1985) be on file in the Alaska OCS Region. This certification is 
required by 41 CFR 60 and Executive Order No. 11246 of September 24, 
1965, as amended by Executive Order Nos. 11375 (October 13, 1967), 
12086 (October 5, 1978), and 13279 (December 12, 2002). In any event, 
prior to the execution of any lease contract, both forms are required 
to be on file in the Alaska OCS Region.
    Notice of Bidding Systems: Section 8(a)(8) (43 U.S.C. 1337(a)(8)) 
of the OCS Lands Act requires that, at least 30 days before any lease 
sale, a Notice be submitted to Congress and published in the Federal 
Register. This Notice of Bidding Systems is for OCS Lease Sale 193, 
Chukchi Sea, scheduled to be held on February 6, 2008. In Sale 193, all 
blocks are being offered under a bidding system that uses a cash bonus 
and a fixed royalty of 12\1/2\ percent with a royalty suspension of up 
to 30 million barrels of oil equivalent per lease. The amount of 
royalty suspension available on each lease is dependent on the area of 
the lease and specified in the Sale Notice. This bidding system is 
authorized under 30 CFR 260.110(g), which allows use of a cash bonus 
bid with a royalty rate of not less than 12 \1/2\ percent and with 
suspension of royalties for a period, volume, or value of production, 
and an annual rental. Analysis performed by MMS indicates that use of 
this system provides an incentive for development of this area while 
ensuring that a fair sharing of revenues will result if major 
discoveries are made and produced.
    Geophysical Data and Information Statement: Pursuant to 30 CFR 
251.12, MMS has a right to access geophysical data and information, as 
well as reprocessed versions of the data, collected under a permit in 
the OCS. Every bidder submitting a bid on a block in Sale 193, or 
participating as a joint bidder in such a bid, must submit a 
Geophysical Data and Information Statement (GDIS) identifying any 
processed or reprocessed pre- and post-stack geophysical data and 
information used as part of the decision to bid or participate in a bid 
on the block. The GDIS should clearly identify the survey type (2-D or 
3-D), survey extent (i.e., number of line miles for 2D or number of 
blocks for 3D), and imaging type (pre-stack, post-stack and migration 
(time and/or depth) algorithm) of the data and information. The 
statement must also include the name and phone number of a contact 
person and an alternate, who are both knowledgeable about the data 
listed, the owner or controller of the reprocessed data or information, 
the survey from which the data were reprocessed and the owner/
controller of the original data set, the date of reprocessing and 
whether the data were processed in-house or by a contractor. In the 
event such data and information include multiple data sets processed 
from the same survey using different velocity models or different 
processing parameters, you should identify only the highest quality 
data set used for bid preparation. The MMS reserves the right to query 
about alternate data sets and to quality check and compare the listed 
and alternative data sets to determine which data set most closely 
meets the needs of the fair-market-value determination process.
    The statement must also identify each block upon which a bidder 
participated in a bid but for which it does not possess or control such 
data and information.
    In the event your company supplies any type of data to the MMS, in 
order to get reimbursed, your company must be registered with the 
Central Contractor Registration (CCR) at http://www.ccr.gov. This is a 
requirement that was implemented on October 1, 2003, and requires all 
entities doing business with the Government to complete a business 
profile in the CCR and update it annually. Payments are made 
electronically based on the information contained in the CCR. 
Therefore, if your company is not actively registered in the CCR, MMS 
will not be able to reimburse or pay your company for any data 
supplied.
    Protecting and disclosing data and information listed on the GDIS 
to the public is governed by 30 CFR 251.14. Except as specified in that 
section or in 30 CFR 250 and 252, if the Regional Director determines 
any data or information are exempt from public disclosure under 30 CFR 
251.14(a), MMS will not provide the data and information to any State 
or to the executive of any local government or to the public unless the 
bidder and all third parties agree to the disclosure. For this reason, 
the bidder is instructed to submit the GDIS in a separate, sealed 
envelope at the time of bid submission. An example of the GDIS and a 
sample of the Geophysical Information envelope are available at the MMS 
Alaska OCS Region's Web page at http://www.mms.gov/alaska.

    Dated: December 20, 2007.
Randall B. Luthi,
Director, Minerals Management Service.
BILLING CODE 4310-MR-P

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[FR Doc. 07-6226 Filed 12-31-07; 8:45 am]
BILLING CODE 4310-MR-P