By OGJ editors
HOUSTON, July 16 -- The US Department of the Interior has told BP PLC that it must report all oil and natural gas-related activities at the damaged Macondo well and pay royalties on all hydrocarbons captured from the leaking well.
The company also will be liable for royalties on lost or wasted oil and gas if regulators determine that negligence or regulatory violations caused or contributed to the Deepwater Horizon explosion and subsequent leak. BP operates the well in 5,000 ft of water off Louisiana on Mississippi Canyon Block 252.
Michael R. Bromwich, director of DOI’s Bureau of Ocean Energy Management, Regulation, and Enforcement, notified BP of its reporting responsibility and royalty liability in a July 15 letter to Guy Otwell, of BP America Inc.’s tax department.
Bromwich said failure by BP to fulfill these obligations could be considered a knowing and willful violation of the federal Oil and Gas Royalty Management Act. He also noted that DOI reserves “any and all rights and remedies available to the United States arising from the Deepwater Horizon oil spill.”
Under the Outer Continental Shelf Lands Act and the federal lease provisions, BP is required to pay royalties immediately for all oil and gas captured from the Macondo well, Bromwich said.