U.S. Department of the Interior Minerals Management Service Gulf of Mexico OCS Region

The U.S. Department of the Interior's Minerals Management Service (MMS) announced today that deepwater royalty relief has been confirmed for the East Breaks 168 Field.  Lease OCS-G 17233, owned by Walter Oil & Gas Corporation, resulted from a sale held after enactment of the Deepwater Royalty Relief Act and is the first new lease to receive royalty relief automatically under the Act.  The tract was offered in the Western Gulf of Mexico Sale 161 held in August 1996 and was issued on February 1, 1997.  The first well was spudded in June 1997 and brought on production on February 21, 1998, just 13 months after lease issuance.

"This marks the first "new" lease to receive the benefits under the Deepwater Royalty Relief Act.  This Act will expedite exploration and development in the deepwater area," said MMS Regional Director Chris Oynes.

Royalties will be suspended on the first 17.5 million barrels of oil equivalent produced from this field.  The East Breaks 168 Field is located in approximately 202 meters of water about 110 miles SSE of Galveston.  This field currently consists of only Lease OCS-G 17233.

The Act, signed by President Clinton in November of 1995, allows the Secretary of the Interior to offer Outer Continental Shelf tracts for lease with suspensions of royalties for a volume, value, or period of production.  This Act applies to tracts in water depths of 200 meters or more and which lie west of 87 degrees, 30 minutes West longitude.

The MMS is the Federal Agency that manages the Nation's natural gas, oil and other mineral resources on the OCS, and collects, accounts for and distributes about $6 billion in revenues from Federal offshore mineral leases and from onshore mineral leases on Federal and Indian lands.