What is MMS doing to make companies produce on the leases they already have?
A26: The MMS encourages due diligence by establishing primary terms of leases that allow only the minimum length of time a company should need to explore a lease. At the end of the primary term, the lease must produce in paying quantities or the operator must conduct continuous operations in order to keep the lease in effect unless MMS grants an extension. If an extension is granted, the MMS monitors activity closely and ensures that approved milestones are timely met. In addition, for recent lease sales, MMS has employed escalating rentals to encourage early lease development. Q27: According to recent reports, MMS doesn’t have a consistent definition for due diligence, and companies routinely get extensions on their leases without conducting any activity. Shouldn’t that be fixed before new areas are offered? A27: The MMS does not grant extensions on leases unless companies meet strict guidelines. See answer above.
MMS encourages due diligence by establishing primary terms of leases that allow only the minimum length of time a company should need to explore a lease. At the end of the primary term, the lease must produce in paying quantities or the operator must conduct continuous operations in order to keep the lease in effect unless MMS grants an extension. If an extension is granted, the MMS monitors activity closely and ensures that approved milestones are met in a timely fashion.
