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Oil Companies May Avoid Royalty Payments
- Article from:
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AP Online
- Article date:
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September 12, 2006
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Copyright informationCopyright 2006 Associated Press/AP Online. This material is published under license from the publisher through YellowBrix, Alexandria, Virginia. All inquiries regarding rights should be directed to YellowBrix. (Hide copyright information)
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WASHINGTON - Oil companies are under pressure to resolve flawed drilling leases that allow them to avoid federal royalty payments, including on oil from a major discovery in the Gulf of Mexico.
The issue stems from a mistake eight years ago that omitted a provision in more than a thousand drilling leases that would have required royalty payments but only if the price of oil went above $36 a barrel.
At the time oil was much cheaper and Congress had allowed the royalty break to spur deep-water exploration.
With oil now costing almost double the trigger level, most of those leases would be subject to royalty payments had the provision not been omitted in leases issued in 1998-99.
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