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Proposed Rule

Oil and Gas and Sulphur Operations on the Outer Continental Shelf; Suspension of Operations for Exploration Under Salt Sheets

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Minerals Management Service (MMS), Interior.


Proposed rule.


MMS proposes to modify regulations that govern suspensions of operations for oil and gas leases on the Outer Continental Shelf (OCS). There are instances where oil and gas lessees begin timely analysis of geophysical data early in the lease term, but the analysis proves inconclusive because of problems caused by the existence of salt sheets underlying the seabed and overlying possible hydrocarbon deposits. In such cases, the proposed rule would allow lessees to apply for a suspension of operations (SOO) to complete the necessary geophysical analysis before drilling a well. To qualify for a suspension of operations, the lessee must show it has made and will continue to make substantial efforts and financial commitment to process and reprocess its geophysical data.


MMS will consider all comments received by February 8, 2002. MMS may not fully consider comments received after February 8, 2002.


You may mail or hand-carry comments (three copies) to the Department of the Interior; Minerals Management Service; Mail Stop 4024; 381 Elden Street; Herndon, Virginia 20170-4817; Attention: Rules Processing Team.

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John Mirabella, Engineering and Operations Division, (703) 787-1598.

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When a lessee obtains an oil and gas lease on the OCS, MMS regulations allow the lessee flexibility to schedule activities during the primary term. At the end of the primary term, the lease can continue in force only by production, suspension, drilling, or well reworking operations as approved by the Secretary. MMS regulations authorize suspensions before discovery of oil or gas in paying quantities only in limited circumstances. Generally, when a lease reaches the end of the primary term, the lessee must conduct drilling operations until it has made a discovery of oil or gas and a commitment to proceed to development and production.

Although lessees have made great progress in imaging potential objectives in areas under salt sheets, processing, analyzing, and interpreting geophysical, geological, and other relevant data and information is complex and time-consuming. As a result, lessees have been faced with the end-of-lease-term decisions to either allow the lease to expire or drill a well without sufficient geophysical information.

On December 21, 2000, MMS issued Notice to Lessees (NTL) 2000-G22, Subsalt Lease Term Extension. That NTL provides for extension of lease terms for subsalt exploration in cases where the lessee has drilled a well on the lease during the primary term but needs additional time to process geophysical data before drilling another well. The NTL did not provide Start Printed Page 1172additional time to process geophysical data in cases where a well had not been drilled. This rule would authorize MMS to grant a suspension for a lease when the operator has conducted timely analysis and interpretation of the geophysical data that may ultimately lead to a drilling objective but, due to the complexity of the salt sheet, needs additional time to complete the geophysical analysis before drilling. The provision requires the lessee to conduct timely analysis of geophysical information before the lessee may be granted additional time because of complications associated with the presence of the salt sheet. In considering whether the analysis of geophysical information is timely, MMS will require the lessee to have collected and analyzed geophysical information (i.e., full 3-D depth migration beneath the salt sheet and over the entire lease area) before the end of the third lease year and to have completed additional data reprocessing before MMS will grant a suspension. MMS finds that this provision will address those special circumstances and that appropriate suspensions may lead to improved opportunities for effective exploration, development, and production.

Procedural Matters

Public Comment Procedure

Comments on the proposed rule, including names and home addresses of respondents, are available for public review during regular business hours. Individual respondents may request that we withhold their home address or identity from the rulemaking record to the extent allowable by law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comment. However, we will not consider anonymous comments. We will make all comments from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety.

Regulatory Planning and Review (Executive Order 12866)

This document is not a significant rule as determined by the Office of Management and Budget (OMB) and is not subject to review under Executive Order 12866.

Over the next 5 years, MMS anticipates that companies would make 3 to 5 requests each year under the proposed rule. We estimate that in three of the cases each year, this new rule will prevent unnecessary compelled drilling of wells that may not otherwise have been drilled had the geophysical analysis been sufficient. Depending on the water depth and the well depth, we estimate that drilling each well, on average, would have cost $10 million. Selective suspensions will help reduce potential environmental impact and produce approximately $30 million in private sector savings.

(1) This rule will not have an effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.

(2) This rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency. Issuance of a suspension for a lease does not interfere with the ability of other agencies to exercise their authority.

(3) This rule does not alter the budgetary effects of entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients. This rule will have no effect on the rights of the recipients of entitlements, grants, user fees, or loan programs.

(4) This rule does not raise novel legal or policy issues.

Regulatory Flexibility (RF) Act

The Department certifies that this rule will not have a significant economic effect on a substantial number of small entities under the RF Act (5 U.S.C. 601 et seq.).

This rule may directly or indirectly affect lessees and operators of leases on the OCS. This includes about 130 different companies. These companies are generally classified under the North American Industry Classification System (NAICS) code 211111, which includes companies that extract crude petroleum and natural gas. For this NAICS code classification, a small company is one with fewer than 500 employees. Based on these criteria, we estimate that about 70 percent of these companies are considered small. We expect few, if any, of the small companies to apply for a suspension under this rule. Some small companies may be included in partnerships with larger companies that are exploring in the subsalt areas.

Your comments are important. The Small Business and Agriculture Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small business about Federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency's responsiveness to small business. If you wish to comment on the enforcement actions of MMS, call toll-free (888) 734-3247.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

This rule is not a major rule under the SBREFA (5 U.S.C. 804(2)). This rule:

(a) Does not have an annual effect on the economy of $100 million or more.

(b) Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.

(c) Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises.

We do not expect this rule to have a significant effect because, as discussed above, this rule will have a positive effect on the private sector of approximately $30 million per year in avoided costs.

Paperwork Reduction Act (PRA) of 1995

The PRA provides that an agency may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. Until OMB approves a collection of information and assigns a control number, you are not required to respond. The proposed revisions to 30 CFR part 250, subpart A, refer to, but do not change, information collection requirements in current regulations. OMB has approved the referenced information collection requirements under OMB control numbers 1010-0114, current expiration date of September 30, 2002. The rule proposes no new reporting or recordkeeping requirements, and an OMB form 83-I submission to OMB under the PRA is not required.

Federalism (Executive Order 13132)

With respect to Executive Order 13132, the rule does not have Federalism implications. This rule does not substantially and directly affect the relationship between the Federal and State governments. To the extent that State and local governments have a role in OCS activities, this rule does not affect that role.

Takings (Executive Order 12630)

With respect to Executive Order 12630, the proposed rule does not have significant Takings implications. A Takings Implication Assessment is not required. The proposed rulemaking is not a governmental action capable of Start Printed Page 1173interfering with constitutionally protected property rights.

Energy Supply, Distribution, or Use (Executive Order 13211)

This rule is not a significant rule and is not subject to review by OMB under Executive Order 12866. The rule may have a small positive effect on energy supplies.

Civil Justice Reform (Executive Order 12988)

With respect to Executive Order 12988, the Office of the Solicitor has determined that this rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Executive Order.

National Environmental Policy Act (NEPA) of 1969

This rule does not constitute a major Federal action significantly affecting the quality of the human environment. The Department of the Interior has established that “issuance and/or modification of regulations” is considered a categorically excluded action as it results only in administrative effects causing no significant impacts on the environment and, therefore, will not require preparation of an environmental assessment or impact statement. MMS has determined that this action does not represent an exception to the categorical exclusion. A detailed statement under NEPA is not required.

Unfunded Mandate Reform Act (UMRA) of 1995 (Executive Order 12866)

This rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local, or tribal governments or the private sector. A statement containing the information required by the UMRA (2 U.S.C. 1531 et seq.) is not required.

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List of Subjects in 30 CFR Part 250

  • Continental shelf
  • Environmental impact statements
  • Environmental protection
  • Government contracts
  • Investigations
  • Mineral royalties
  • Oil and gas development and production
  • Oil and gas exploration
  • Oil and gas reserves
  • Penalties
  • Pipelines
  • Public lands-mineral resources
  • Public lands—right-of-way
  • Reporting and recordkeeping requirements
  • Sulphur development and production
  • Sulphur exploration
  • Surety bonds
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Dated: December 21, 2001.

James E. Cason,

Acting Assistant Secretary, Land and Minerals Management.

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For the reasons stated in the preamble, the Minerals Management Service (MMS) proposes to amend 30 CFR 250 as follows:

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1. The authority citation for part 250 continues to read as follows:

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Authority: 43 U.S.C. 1331, et seq.

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2. In § 250.175, redesignate the existing text as paragraph (a) and add a new paragraph (b) to read as follows:

When may the Regional Supervisor grant an SOO?
* * * * *

(b) The Regional Supervisor may grant an SOO not to exceed 3 years in the Western Gulf of Mexico when all of the following conditions are met:

(1) The lease was issued with an initial lease term of 5 years, or with an initial term of 8 years with a requirement to drill within 5 years;

(2) The lessee has collected and analyzed appropriate geophysical information prior to the end of the third lease year;

(3) The geophysical information confirms the presence of a salt sheet as well as evidence that a drillable objective may exist beneath the salt sheet;

(4) The applicant has completed additional reprocessing prior to submitting the application for suspension; and

(5) The applicant demonstrates that additional time is necessary to gather new geophysical data or to reprocess or reinterpret existing data to further define drilling objectives beneath a salt sheet.

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[FR Doc. 02-521 Filed 1-8-02; 8:45 am]