MMS Regional Director Focus of House Panel's 'Royalty Relief' Probe

A House panel probing when the Minerals Management Service learned about the lack of "price thresholds" in 1990s oil-and-gas leasing is focusing on the agency's Gulf of Mexico regional director, according to a committee staff memo.

The Subcommittee on Energy and Resources has scheduled a hearing for tomorrow addressing why deepwater Gulf of Mexico leases in 1998 and 1999 that allow "royalty relief" lack the thresholds, which suspend the waivers when oil and gas prices exceed certain levels. The absence of such thresholds could cost taxpayers billions, according to the Government Accountability Office.

The panel will focus attention tomorrow on Gulf of Mexico regional director Chris Oynes, the memo says.

Oynes told the subcommittee he did not learn of the missing thresholds until 2000, but that assertion "appears to be inconsistent" with information provided by Chevron Corp., the memo says. The company told the panel that it notified Oynes and his staff of the missing thresholds "several times" in 1998 and 1999.

"If the latter is true, Mr. Oynes and his staff could have saved the U.S. Government at least $5 billion had they immediately rectified the problem," the memo says.

Both Oynes and Chevron officials are set to appear at the hearing. Oynes could not be reached for a comment through the MMS media office yesterday evening.

Royalty relief for Gulf of Mexico producers stems from 1995 legislation aimed at spurring costly deepwater production at a time when energy prices were much lower.

Copyright 2006 Greenwire. All Rights Reserved. Visit E&E Publishing for a free trial.

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