Analyst sees no meat in MMS proposal to expand offshore royalty relief

The US Minerals Management Service proposal to expand offshore royalty relief in an effort to increase deep natural gas production in the Gulf of Mexico is "all sizzle, no steak," said a financial analyst with Raymond James & Associates Inc. (RJA), St. Petersburg, Fla.MMS officials recently proposed to expand royalty-suspension incentives to encourage companies to risk exploration and development of deep gas deposits in shallow-water areas already under lease (OGJ Online, Mar. 26, 2003).Under that rule, lessees would be eligible for royalty relief on existing leases if they drill for new and deeper prospects more than 15,000 ft below the seabed. MMS estimates as much as 20 tcf of undiscov...

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