Eastern Gulf of Mexico Milestones

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This page last updated:
October 12, 2007

Eastern Gulf of Mexico Milestones

On December 20, 1973, the U.S. Department of the Interior held its first OCS lease sale for the Mississippi/Alabama/Florida (MAFLA) areas. Of the 147 tracts offered for lease in this sale, 89 tracts were bid on, resulting in $1.49 billion in high bids.
In June 1974, Exxon was issued the first permit to drill in this area on Pensacola South blocks. The first well was drilled to a total depth of 3,279 meters (10,930 feet) on what is now Destin Dome Block 162, located 64 kilometers (40 miles) southwest of Panama City, by Exxon and partners to explore the Lower Cretaceous section of the Destin Dome Anticline.
Between June 1974 and June 1975, Exxon drilled six exploratory wells to depths ranging from 1,440 to 3,279 meters (4,800 to 10,930 feet) on the eastern crest of the Destin Dome Anticline, and failed to find any oil or gas in commercial quantities. A seventh well was drilled to a depth of 5,400 meters (18,000 feet) and, though this well was dry, it was important because it encountered a significant thickness of reservoir-quality sand in the Norphlet Formation.
By October 1975, drilling in the MAFLA area had halted after 15 dry holes had been drilled by the offshore industry. By February 1978, operators returned 38 of the 87 tracts leased during the 1973 MAFLA sale.
OCS Lease Sale 79 (held January 1984) became the first areawide sale held in the Eastern Gulf of Mexico--156 tracts were purchased with high bids totaling $310,580,000.
Shell's Destin Dome Block 160 Well No. 1 became the fifteenth well drilled off the Florida Panhandle (1985). The well was drilled into the Norphlet Formation on the crest of the Destin Dome Anticline. Shell’s well marked the first hydrocarbon discovery (oil pay) made in the Eastern Gulf of Mexico, offshore Florida. Shell relinquished the lease in 1990.
On November 16, 1988, OCS Lease Sale 116 (Part 1) was held.
In January 1989, two wells were drilled on Destin Dome Blocks 1 and 2 by Gulfstar to test the shallow Miocene seismic amplitude anomalies located offshore Baldwin County, Alabama. A third well was drilled on Pensacola Block 881. The three natural gas discovery wells drilled by Gulfstar qualified these leases as producible.
In 1987, 1989 and 1995, Chevron U.S.A. drilled three discovery wells in the Destin Dome Planning area (1987--Destin Dome Block 56 [Well No. 1], 1989--Destin Dome Block 56 [Well No. 2] and 1995--Destin Dome Block 57 [Well No. 1]), located approximately 40 kilometers (25 miles) south of Pensacola. All three wells found significant quantities of natural gas. In April 1996, Chevron and co-owners announced the test results from the Destin Dome Block 57 No. 1 well. A flow rate of 41 million standard cubic feet per day with no liquid hydrocarbons was achieved from the Norphlet Formation below 6,600 meters (22,000 feet). This natural gas find is part of the same geologic formation (the Norphlet formation) that is being produced in the Mobile Bay, Alabama, offshore area.
In 1987, as a result of the MMS 5-Year Oil and Gas Leasing Program, several areas were deferred from leasing consideration in the Eastern Gulf of Mexico. These areas included
- blocks within 30 miles of the coast--from Cape San Blas to 26° N. latitude,
- blocks located in the Florida Middle Ground,
- blocks within the 20-meter isobath between 25° and 26° N. latitude,
- blocks located south of 25° N. latitude,
- blocks located within a 6-mile area from Cape San Blas to Panama City, and
- blocks within Military Warning Area W-155.
In June 1987, Amoco drilled a well on Destin Dome 111 to a depth of 582 meters (1,940 feet) and discovered gas/condensate from the Norphlet, qualifying the lease as producible, but Amoco relinquished it in 1994.
In 1990, President George H. Bush signed an Executive Order canceling Sale 116, Part II, and excluding the area south of 26° N. latitude and east of 86° W. longitude from leasing consideration until after the year 2000.
In October 1995, 73 oil and gas leases located south of 26° N. latitude were relinquished back to the Federal Government as part of a litigation settlement. Consequently, no active Federal natural gas and oil leases exist off southwest Florida. Likewise, no active leases exist in the Straits of Florida Planning Area or off Florida’s east coast (South Atlantic Planning Area).
In the latter part of 1996, development plans were filed by OEDC Exploration & Production, L.P. on Pensacola Block 881 (see Activities Offshore Alabama) and by Chevron U.S.A. and partners on its Destin Dome 56 Unit. See announcement concerning the litigation settlement on these leases (see Activities Offshore Florida). OEDC’s plan was approved by MMS on September 5, 1997.
In February 1998, MMS approved Amoco's plan to develop its King's Peak field. Amoco's King's Peak field is located in Desoto Canyon (Blocks 133 and 177) and Mississippi Canyon (Blocks 217 and 173) (see Activities Offshore Alabama).
The MMS commenced preparation of a development Environmental Impact Statement (EIS) for Chevron's Destin Dome 56 project in late 1997. The draft EIS was distributed to the public and hearings were held in August/September 1999.
The State of Florida objected to Chevron's consistency findings on the Destin Dome 56 Project in February 1998. Chevron appealed the State's objection to the U.S. Department of Commerce in April 1998. Commerce published a Notice of Appeal in the Federal Register in July 1998. A public hearing on this issue was held in September 1999.
On June 12, 1998, President Clinton withdrew from leasing, through June 30, 2012, all areas in the Eastern Gulf of Mexico located outside the Sale 181 area as identified in the Final Outer Continental Shelf 5-Year Oil and Gas Leasing Program, 1997-2002.
The prelease process for OCS Lease Sale 181 (scheduled for December 2001) commenced on January 15, 1999, with publication of a Call for Information/Notice of Intent to Prepare an EIS. Scoping meetings were held in July 1999. A draft EIS was made available to the public in November 2000, with Public Hearings being held in January 2001. A final EIS was made available to the public in July 2001.
Unocal (Spirit Energy) commenced production on Pensacola Block 881 in mid-February 1999, constituting the first production in the Eastern Gulf of Mexico Planning Area (see Activities Offshore Alabama).
On October 15, 1999, Gulfstream Natural Gas Systems (ANR) submitted an application to MMS to construct a 36-inch natural gas pipeline from Mobile, Alabama, across the Gulf some 400 miles, to south of Tampa, Florida. MMS permitted the proposed right-of-way on June 1, 2001. The Bucaneer Pipeline Project ROW, which was also applied for in October 1999, was cancelled (see Activities Offshore Florida).
On July 24, 2000, Chevron U.S.A. and partners filed a lawsuit against the U.S. Government over plans, permits, and an appeal associated its Destin Dome 56 Unit Development Plan (see Activities Offshore Florida).
On July 2, 2001, Interior Secretary Gale Norton adjusted the Sale 181 area from 5.9 million acres to about 1.5 million acres, or 256 blocks.
Lease Sale 181 was held on December 5, 2001. MMS awarded 95 high bids totaling $340,474,113.
In July 2002, Interior Secretary Gale Norton announced approval of the 2002-2007 OCS 5-Year oil and natural gas leasing program. Two lease sales were scheduled for the Eastern Gulf of Mexico in 2003 (Sale 189) and 2005 (Sale 197).
AES Ocean Express LLC (February 2002) and Tractebel Calypso LLC have proposed to transport natural gas from the Bahamas to South Florida.
On February 7, 2002, the MMS began the first steps to hold Eastern Gulf Sale 189 (2003) and 197 (2005) with the issuance of a Call and Notice of Intent to Prepare an EIS in the Federal Register. The proposed sale area is no greater than the boundaries of the Sale 181 area and would potentially offer only the unleased area.
On May 28, 2002, Gulfstream Natural Gas System went into service.
On May 29, 2002, Secretary Gale Norton announced that the Department had agreed in principle to settle litigation with oil companies that own interests in the Destin Dome Unit. The companies--Chevron, Conoco and Murphy Oil--relinquished seven of nine leases in the unit that were the subject of the litigation in exchange for $115 million. The remaining two leases, Destin Dome Blocks 56 and 57, are to be held by Murphy and will be suspended until at least 2012, under the terms of the agreement. Murphy has agreed not to submit a development plan on the two remaining leases before 2012, the year when the current moratoria will expire. Under the terms of the agreement, the leases can not be developed unless approved by the Federal Government and State of Florida.
In 2003 Anadarko Petroleum announced gas discoveries on two blocks on which they drilled exploratory wells in the Sale 181 area.
On December 10, 2003, Eastern Gulf of Mexico Sale 189 was held, attracting $8.4 million in high bids on 14 tracts. Six companies participated in the lease sale, which offered 138 blocks comprising approximately 794,880 acres offshore Alabama. The highest bid received was $2.2 million, submitted by Shell and Nexen. Eastern Gulf Sale 197 is scheduled for 2005.
Five independent exploration and production companies and one energy company have come together to develop multiple ultra-deepwater natural gas discoveries located in the Central and Eastern Gulf of Mexico. The Independence Hub will be located on unleased Mississippi Canyon Block 920, in a water depth of 8,000 feet. First production is expected in 2007. The fields will be tied-back to the platform through producer-owned subsea flowline systems. The fields' water depths range from 7,800 to 9,000 feet.