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Notice of Proposed Intent To Reduce Minimum Bid Requirements and Set Sliding-Scale Rentals for Proposed Beaufort Sea Outer Continental Shelf (OCS) Oil and Gas Lease Sale 186

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Minerals Management Service (MMS), Interior.


Notice of proposed intent to reduce minimum bid levels and set sliding-scale rentals for OCS sale 186.


On February 20, 2003, the MMS published a Notice of Availability (68 FR 8306) of the proposed Notice of Sale for Sale 186, which included lease terms and conditions providing for a minimum bid amount of $62 per hectare and a rental rate of $13 per hectare, consistent with past OCS sales in the Alaska Region. After further consideration, the MMS has tentatively determined that the minimum bid levels for Sale 186 should be reduced and rentals set on a sliding scale. The MMS is announcing this proposed action at this time to give potential bidders and other interested parties ample time to consider these changes in preparing for the lease sale. This proposed change in the financial terms and conditions of the proposed sale does not affect minimum royalty requirements, royalty suspension volumes, size, timing, location, or potential impacts of the sale. The final Notice of Sale will establish all terms and conditions for Sale 186 and will be issued at least 30 days before the sale is held. Anyone wishing to comment should send comments by August 1, 2003 to the Alaska OCS Region, 949 East 36th Avenue, 3rd Floor, Anchorage, Alaska 99508-4302.


Beaufort Sea OCS Lease Sale 186 is scheduled for September 24, 2003.


The proposed Notice of Sale and associated documents are available at: Alaska OCS Region, Information Resource Center, Minerals Management Service, 949 East 36th Avenue, Room 330, Anchorage, Alaska 99508-4302, Telephone: (907) 271-6438 or 1-800-764-2627.

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The MMS proposes to apply the minimum bid amounts and rental rates in the table presented below for Sale 186. Refer to the February 2003 proposed Notice of Sale for descriptions of Zones A and B.

Table of Minimum Bids and Rental Rates

Terms (values per hectare)Zone AZone B
Minimum Bid$37.50$25.00
Rental Rates:
Year 1$7.50$2.50
Year 27.503.75
Year 37.505.00
Year 47.506.25
Year 57.507.50
Year 612.0010.00
Year 717.0012.00
Year 822.0015.00
Year 930.0017.00
Year 1030.0020.00

The new bidding requirements outlined above are designed in part to provide potential bidders the incentive to acquire sufficient acreage to support a timely seismic data acquisition program. The revised sliding-scale rental terms are intended to encourage expeditious exploration of domestic energy resources. In Zone A, which we believe holds the most promise for near term development and production of oil resources, the minimum bid and rentals are set slightly above those for Zone B. We set the terms in Zone B similar to those used by the State of Alaska for some leases in the northern portion of the state as well as to the terms used by the Bureau of Land Management for the leasing of less prospective acreage in the National Petroleum Reserve—Alaska. Hence, the revised terms presented here will allow the Federal offshore lease offering to be comparable to other sales in this area. We have determined that these new proposed terms will not increase the level or range of oil and gas development activities contemplated and addressed in the Final Environmental Impact Statement or the Coastal Zone Management Act consistency determination.

The MMS is required to assure that fair market value is received for all OCS lands leased and rights conveyed. Although we are proposing to change the minimum bid and rental requirements, all bids received in Sale 186 will undergo an extensive evaluation to determine if they represent fair market value. Thus, regardless of the minimum bid level, the high bid received for any block must satisfy the bid adequacy criteria established by the MMS for a lease to be awarded. Note that this change in terms is intended to apply only to Sale 186 and does not necessarily represent a general policy change for future Alaska or other OCS lease sales. In accordance with the 5-Year OCS Oil and Gas Leasing Program for 2002-2007, minimum bids and rental rates are considered on a sale-by-sale basis.

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Johnnie Burton,

Director, Minerals Management Service.

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[FR Doc. 03-18139 Filed 7-16-03; 8:45 am]