Kerr-McGee Sues Interior Over 'Royalty Relief'
The lawsuit attacks Interior's right to suspend a subsidy called "royalty relief" that was offered to producers under the 1995 Deep Water Royalty Relief Act. The act was aimed at spurring development of high-risk, high-cost deepwater gulf projects at a time when energy prices were much lower.
The company says Interior does not have the right to suspend the "royalty relief" when energy prices reach certain "price thresholds." The lawsuit alleges that Kerr-McGee has leases purchased in the 1990s under the act that contain "price thresholds" the company contends cannot be legally imposed under the 1995 law.
Most of these leases have begun producing over the last several years, although production has not begun on several of them. The lawsuit alleges that the Interior early this year directed the company to begin paying royalties "on production from certain mandatory relief leases before Kerr-McGee has produced the minimum volumes from those leases that Congress guaranteed would be royalty free."
The company is opposing the Jan. 6 order from Land and Minerals Management's acting Assistant Secretary Johnnie Burton that claims price thresholds for natural gas were exceeded in 2003 and 2004, and the threshold for oil was exceeded in 2004, the March 17 lawsuit states.
The lawsuit, filed in the U.S. District Court for the Western District of Louisiana, calls the Burton order unlawful and asks for injunction against it, and a declaration that the company is entitled to royalty relief "without regard to the prices of oil or gas."
A spokesman for Interior's Minerals Management Service said it would be "inappropriate" to comment on the lawsuit, citing the Justice Department's purview over the issue.
Copyright 2006 Greenwire. All Rights Reserved. Visit E&E Publishing for a free trial.
- UAE to Have Own Electrolyzer Production for Green Hydrogen
- Two LNG Terminals Completed in Philippines
- Latest Troll Try Spits Dust
- Saudi to Cut Output by 1MM BPD in Solo OPEC+ Move
- Major Yacht Maker Subscribes to Eni's Biofuel
- CNOOC Starts Up China's First Offshore CCS Project
- UK Starts More Reforms to Speed Up Renewable Power Generation
- Regulator Fines Hilcorp Alaska in Latest of Over 60 Enforcement Actions
- Which Generation Is Most in Demand in Oil, Gas Right Now?
- Exxon and Chevron Shareholders Reject Toughening Climate Goals
- Will the World Hit Net Zero by 2050?
- Further OPEC+ Production Cuts Are Still on the Table
- Exxon Bets New Ways to Frack Can Double Oil Pumped from Shale Wells
- NOAA Reveals Outlook for 2023 Atlantic Hurricane Season
- China Is Drilling a 10K Meter Deep Hole Into Earth's Crust
- Trade Sanctions on Russia Led to Rise in Dark Oil Ship Transfers: Report
- Key Milestone Hit Towards Potential First Ever GOM Offshore Wind Lease Sale
- Eni Enters Deal on Powering Maritime Transport with Biofuels
- Which Generation Is Most in Demand in Oil, Gas Right Now?
- Who Is the Most Prolific Private Oil and Gas Producer in the USA?
- USA EIA Slashes 2023 and 2024 Brent Oil Price Forecasts
- BMI Reveals Latest Brent Oil Price Forecasts
- OPEC+ Has Lots of Dry Powder for Further Cuts
- Is There a Danger That Oil and Gas Runs out of Financing?
- Could the Oil Price Crash in 2023?
- Invictus Strikes Oil, Gas in Zimbabwe
- BMI Projects Gasoline Price Through to 2026
- What Will World Oil Demand Be in 2023?