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This page last updated: August 18, 2004
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Royalty Relief
Information
The four general royalty relief categories in the
Gulf of Mexico Region are Deepwater,
Shallow Water Deep Gas, End-of-Life, and Special Case. MMS
has a formal program for the Deepwater and End-of-Life
categories. There is no formal structure for the Special Relief category. MMS
encourages operators to contact our staff directly to
discuss the details of any potential submittal in order to expedite the process.
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Deepwater
The deepwater royalty relief category is the most common and consists of both
discretionary relief and relief that does not require an
economic evaluation. Discretionary relief requires an application
demonstrating economic need whereas there is no application process for
the relief that does not require an economic evaluation. The discretionary relief applies to "fields" with leases
issued prior to passage of the Deepwater Royalty
Relief Act of 1995 (i.e., November 28, 1995) in water depths 200 meters or
deeper that lie wholly west of 87 degrees, 30 minutes
West longitude. These leases are called Pre-Act Leases. Relief
not requiring an economic evaluation applies to "fields" consisting of leases issued from sales
held in years 1996 through 2000 in water depths 200 meters or deeper
that lie wholly west of 87 degrees, 30 minutes West
longitude. These leases are called "eligible" leases.
Eligible leases may be able to apply for discretionary relief under
End-of-Life and Special Case Relief programs. By regulation, neither
type of relief can be given to "fields" containing a current lease
that produced prior to the passage of the Act.
In addition, leases resulting from a Sale held after year 2000 may be issued
with an automatic royalty suspension volume on a "lease" basis. Post-2000
leases issued with an automatic royalty suspension volume are called
"Royalty Suspension" leases. The information below specifies the applicable
water depth categories and royalty suspension volumes
by Sale. All Post-2000 leases in water depths greater than 200 meters are also
eligible to apply for discretionary relief. Please
refer to the regulations and guidelines listed below for more information.
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"Pre-Act" Lease Information
Regulations
for Discretionary Relief (See 30 CFR 203.60-91)
Guidelines for the Application,
Review, Approval, and Administration of the Deepwater Royalty Relief
Program For Pre-Act Leases and Post-2000 Leases
- Appendix (I), NTL No. 2002-N02;
Effective: February 14, 2002
Deepwater Royalty
Relief Economic Model: Economic Model Documentation, Model
Spreadsheet, and Example Files
Economic Assumptions for RSVP Deep Water
Royalty Relief Model Application Fees for Royalty Relief
Requests - NTL. No. 98-5N Field Naming Handbook, March 1996 - A
guide and reference document to the field naming process for leases with qualifying oil
and gas discoveries. Updated December 1997.
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Post-Act "Eligible" Lease Information
Deepwater Royalty Relief Regulations for New Leases (See
30 CFR 260.112-117)
Confirmation of Deepwater Royalty
Relief for Leases Issued From Sales Held in 1996-2000 (See 30 CFR 260.114(c))
Field Naming Handbook, March 1996 - A
guide and reference document to the field naming process for leases with qualifying oil
and gas discoveries. Updated December 1997.
- "Post-2000" Lease Information
Automatic Royalty Relief Provisions –
Deepwater Royalty Relief Regulations for New Leases (See
30 CFR 260.120-124)
Final Notice of Sale for Central Gulf of Mexico Lease Sale 178, Part 1
Final Notice of Sale for Western Gulf of Mexico Lease Sale 180
Final Notice of Sale for Eastern Gulf of Mexico Lease Sale 181
Final Notice of Sale for Central Gulf of Mexico Lease Sale 182
Final Notice of Sale for
Western Gulf of Mexico Lease Sale 184
Discretionary Royalty Relief Provisions-
Regulations
for Discretionary Relief (See 30 CFR 203.60-91)
Guidelines for the Application,
Review, Approval, and Administration of the Deepwater Royalty Relief
Program For Pre-Act Leases and Post-2000 Leases
- Appendix (I), NTL No. 2002-N02;
Effective: February 14, 2002Deepwater Royalty
Relief Economic Model: Economic Model Documentation, Model
Spreadsheet, and Example Files
Economic Assumptions for RSVP Deep Water
Royalty Relief Model
Application Fees for Royalty Relief
Requests - NTL. No. 98-5N
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Shallow Water Deep Gas Incentives
As stipulated in the Lease Instrument and Final Notice of Lease Sale, certain
leases may be eligible for a royalty suspension volume
for shallow water (< 200 meters) deep gas production.
Refer to your Lease Instrument and the following:
Final Notice of Sale for Central Gulf of Mexico Lease Sale 178, Part 1
Final Notice of Sale for Western Gulf of Mexico Lease Sale 180
Final Notice of Sale for Central Gulf of Mexico Lease Sale 182
Final Notice of Sale for
Western Gulf of Mexico Lease Sale 184
In addition to leases with shallow water deep gas royalty
relief provisions in their lease instruments, certain other leases may be
eligible for shallow water deep gas royalty relief through the Deep Gas in
Shallow Water Rule. For additional information, please refer to the
following sources:
Deep
Gas in Shallow Water Final Rule (January 26, 2004)
Deep Gas in
Shallow Water Final Rule - Technical Amendments (April 30, 2004)
Relief of
Reduction in Royalty Under Certain Federal Oil and Gas Leases on the Outer
Continental Shelf (April 30, 2004)
Correction to the Deep Gas in Shallow Water Final Rule - Technical Amendments
(May 7, 2004)
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End-of-Life Royalty Relief
End-of-life relief is applicable to producing leases regardless of water
depth when it can be shown that the economic limit has been reached and relief
will result in "increased production."
If approved,
the royalty rate will be reduced by half subject to certain stipulations. Please
refer to the regulations and guidelines listed below
for more information.
Regulations
for Discretionary Relief (See 30 CFR 203.50-56)
Guidelines for the Application,
Review, Approval, and Administration of the Royalty Relief
for End-of-Life Leases; Appendix (II), NTL
No. 02-N02; Effective February 14, 2002
End-Of-Life Leases Spreadsheet
(Excel)
Application Fees for Royalty Relief
Requests Under 30 CFR 203 - NTL No. 98-5N
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Special Case Relief
Relief can be requested when our formal programs provide
inadequate encouragement to increase production or development. Other conditions
must also be met in order to submit an application. If
you believe your situation meets the conditions for special case relief, you
should submit data and arguments to the Regional Supervisor for Production and
Development in the Gulf Of Mexico Region. If we agree you meet the
required conditions, guidance will be provided
concerning the application and the appropriate fee.
For more details, please refer to the information listed below.
Regulations
for Discretionary Relief (See 30 CFR 203.80)
Economic Assumptions for RSVP Deep Water
Royalty Relief Model
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General Information
Oil and
Gas Price Thresholds
Listing of Deepwater Pre-Act Applications Received and
Post-Act Leases with Confirmed Relief
News Releases related to Deepwater Royalty Relief.
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