MMS proposes supplemental deepwater royalty relief

US Mineral Management Service will amend its regulations to provide royalty relief to marginal deepwater fields in the Outer Continental Shelf, MMS said Friday. This supplemental proposal, an amendment to MMS' royalty relief regulations published Sept. 14, would allow certain Gulf of Mexico deepwater leases at least 200 m deeper and sold after this year to eligible for additional discretionary royalty suspensions.


US Mineral Management Service (MMS) published this week a proposal to allow additional discretionary royalty relief on a case-by-case basis for marginal oil and natural gas leases in the Outer Continental Shelf (OCS).

The supplemental proposal, an amendment to MMS' royalty relief regulations published Sept. 14, would allow certain Gulf of Mexico deepwater leases at least 200 m deeper and sold after this year to eligible for additional discretionary royalty suspensions.

MMS said it proposed the rule to encourage the development of marginal leases by allowing producers with marginal leases to seek royalty relief on an individual basis. This would prevent MMS from having to offer blanket relief to other categories of properties at the same level that might not need additional royalty incentives.

The agency said the incentives will help sustain the increase in deepwater exploration and development activity created in part by the Deep Water Royalty Relief Act of 1995.

"Sustained deepwater activity helps realize important national objectives such as promoting increased domestic investment, encouraging continued increases on offshore oil and gas exploration and production, extending deepwater infrastructure, enhancing deepwater technologies, and expanding our understanding of deepwater geology and engineering," said MMS Director Walt Rosenbusch.

The comment period on the proposed rule closes Dec. 18.

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