30 CFR § 203.2
How can I obtain royalty relief?
July 29, 2020
We may reduce or suspend royalties for Outer Continental Shelf (OCS) leases or projects that meet the criteria in the following table.
Open Table
| If you have a lease . . . | And if you . . . | Then we may grant you . . . |
|---|---|---|
| (a) With earnings that cannot sustain production (i.e., End-of-life lease), | Would abandon otherwise potentially recoverable resources but seek to increase production by operating beyond the point at which the lease is economic under the existing royalty rate, | A reduced royalty rate on current monthly production and a higher royalty rate on additional monthly production (see §§203.50 through 203.56). |
| (b) Located in a designated GOM deep water area (i.e., 200 meters or greater) and acquired in a lease sale held before November 28, 1995, or after November 28, 2000, | Propose an expansion project and can demonstrate your project is uneconomic without royalty relief, | A royalty suspension for a minimum production volume plus any additional production large enough to make the project economic (see §§203.60 through 203.79). |
| (c) Located in a designated GOM deep water area and acquired in a lease sale held before November 28, 1995 (Pre-Act lease), | Are on a field from which no current pre-Act lease produced (other than test production) before November 28, 1995, (Authorized field,) | A royalty suspension for a minimum production volume plus any additional volume needed to make the field economic (see §§203.60 through 203.79). |
| (d) Located in a designated GOM deep water area and acquired in a lease sale held after November 28, 2000, | Propose a development project and can demonstrate that the suspension volume, if any, for your lease is not enough to make development economic, | A royalty suspension for a minimum production volume plus any additional volume needed to make your project economic (see §§203.60 through 203.79). |
| (e) Where royalty relief would recover significant additional resources or, offshore Alaska or in certain areas of the GOM, would enable development, | Are not eligible to apply for end-of-life or deep water royalty relief, but show us you meet certain eligibility conditions, | A royalty modification in size, duration, or form that makes your lease or project economic (see §203.80). |
| (f) Located in a designated GOM shallow water area and acquired in a lease sale held before January 1, 2001, or after January 1, 2004, or have exercised an option to substitute for royalty relief in your lease terms, | Drill a deep well on a lease that is not eligible for deep water royalty relief and you have not previously produced oil or gas from a deep well or an ultra-deep well, | A royalty suspension for a volume of gas produced from successful deep and ultra-deep wells, or, for certain unsuccessful deep and ultra-deep wells, a smaller royalty suspension for a volume of gas or oil produced by all wells on your lease (see §§203.40 through 203.49). |
| (g) Located in a designated GOM shallow water area, | Drill and produce gas from an ultra-deep well on a lease that is not eligible for deep water royalty relief and you have not previously produced oil or gas from an ultra-deep well, | A royalty suspension for a volume of gas produced from successful ultra-deep and deep wells on your lease (see §§203.30 through 203.36). |
| (h) Located in planning areas offshore Alaska, | Propose an expansion project or propose a development project and can demonstrate that the project is uneconomic without relief or that the suspension volume, if any, for your lease is not enough to make development economic, | A royalty suspension for a minimum production volume plus any additional volume needed to make your project economic (see §§203.60, 203.62, 203.67 through 203.70, 203.73, and 203.76 through 203.79). |
Tried the LawStack mobile app?
Join thousands and try LawStack mobile for FREE today.
- Carry the law offline, wherever you go.
- Download CFR, USC, rules, and state law to your mobile device.
