Feds: Royalty exemption for new shallow-water Gulf wells


The federal agencies that make and enforce offshore oil and gas leases say they’ll encourage new wells in shallow Gulf of Mexico waters by allowing some reduced-royalty or even royalty-free production if owners can prove they need it.

Some $20 billion worth of oil and gas may go untapped without changes described in a report issued Tuesday, according to the heads of the Bureau of Ocean Energy Management, which makes the leases, and the Bureau of Safety and Enforcement.

The number of wells drilled in shallow water has fallen 89% over the past 10 years, “and approximately 100 platforms a year are being removed with no new platforms being installed,” a joint press release said.

The Center for American Progress and an environmental group, the Center for Biological Diversity, both called the changes a giveaway to the petroleum industry.

Recent shallow-water leases have royalties of 12.5%, the legal minimum, with an 18.75% royalty for deepwater leases—those in more than 200 meters (656 feet) of water. Those signed earlier, in either area, can have either of those rates or 16.67%.

The Associated Press has the full story.