The allocation depends on when production occurs, when we issued the lease, when we assigned it to the field, and whether we award the volume suspension by an approved application or establish it in the lease terms, as prescribed in this section.
(a) If your authorized field has an approved royalty suspension volume under §§203.67 and 203.69, we will suspend payment of royalties on production from all leases in the field that participate in the application until their cumulative production equals the approved volume. The following conditions also apply:
| If . . . | Then . . . | And . . . |
|---|---|---|
| (1) We assign an eligible lease to your authorized field after we approve relief, | We will not change your authorized field's royalty suspension volume determined under §203.69, | Production from the assigned eligible lease(s) counts toward the royalty suspension volume for the authorized field, but the eligible lease will not share any remaining royalty suspension volume for the authorized field after the eligible lease has produced the volume applicable under 30 CFR 560.114. |
| (2) We assign a pre-Act or post-November 2000 deep water lease to your field after we approve your application, | We will not change your field's royalty suspension volume, | The assigned lease(s) may share in any remaining royalty relief by filing the short-form application specified in §203.83 and authorized in §203.82. An assigned RS lease also gets any portion of its royalty suspension volume remaining even after the field has produced the approved relief volume. |
| (3) We assign another lease that you operate to your field while we are evaluating your application, | In our evaluation of your authorized field, we will take into account the value of any royalty relief the added lease already has under 30 CFR 560.114 or its lease document. If we find your authorized field still needs additional royalty suspension volume, that volume will be at least the combined royalty suspension volume to which all added leases on the field are entitled, or the minimum suspension volume of the authorized field, whichever is greater, | (i) You toll the time period for evaluation until you modify your application to be consistent with the newly constituted field; (ii) We have an additional 60 days to review the new information; and (iii) The assigned pre-Act lease or royalty suspension lease shares the royalty suspension we grant to the newly constituted field. An eligible lease does not share the royalty suspension we grant to the new field. If you do not agree to toll, we will have to reject your application due to incomplete information. Production from an assigned eligible lease counts toward the royalty suspension volume that we grant under §203.69 for your authorized field, but you will not owe royalty on production from the eligible lease until it has produced the volume applicable under 30 CFR 560.114. |
| (4) We assign another operator's lease to your field while we are evaluating your application, | We will change your field's minimum suspension volume provided the assigned lease joins the application and is entitled to a larger minimum suspension volume, | (i) You both toll the time period for evaluation until both of you modify your application to be consistent with the new field; (ii) We have an additional 60 days to review the new information; and (iii) The assigned lease(s) shares the royalty suspension we grant to the new field. If you (the original applicant) do not agree to toll, the other operator's lease retains any suspension volume it has or may share in any relief that we grant by filing the short form application specified in §203.83 and authorized in §203.82. |
| (5) We reassign a well on a pre-Act, eligible, or royalty suspension lease from field A to field B, | The past production from the well counts toward the royalty suspension volume that we grant under §203.69 to field B, | For any field based relief, the past production for that well will not count toward any royalty suspension volume that we grant under §203.69 to field A. Moreover, past production from that well will count toward the royalty suspension volume applicable for the lease under 30 CFR 560.114 if the well is on an eligible lease or under 30 CFR 560.124 if the well is on a royalty suspension lease. |
(b) When a project has more than one lease, the royalty suspension volume for each lease equals that lease's actual production from the project (or production allocated under an approved unit agreement) until total production for all leases in the project equals the project's approved royalty suspension volume.
(c) You may receive a royalty-suspension volume only if your entire lease is west of 87 degrees, 30 minutes West longitude. If the field lies on both sides of this meridian, only leases located entirely west of the meridian will receive a royalty-suspension volume.
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.
