---

30 C.F.R. § 260.117   What other provisions apply to royalty suspension volumes for eligible leases?

Title 30 - Mineral Resources

Title 30: Mineral Resources
PART 260—OUTER CONTINENTAL SHELF OIL AND GAS LEASING
Subpart B—Bidding Systems
Eligible Leases

Browse Previous

§ 260.117   What other provisions apply to royalty suspension volumes for eligible leases?

In addition to the provisions in §§260.111 through 260.116, the provisions in this section apply to royalty suspension volumes on eligible leases.

(a) If a new field consists of eligible leases in different water-depth categories, the royalty suspension volume associated with the eligible lease in the deepest water applies.

(b) If your eligible lease is the only eligible lease in a field, you do not owe royalty on the production from your lease up to the applicable royalty suspension volume.

(c) If a field consists of more than one eligible lease:

(1) Payment of royalties on the eligible leases' initial production is suspended until cumulative production equals the field's established royalty suspension volume;

(2) Only production from leases entitled to share in the field's royalty suspension volume counts as part of this cumulative production; and

(3) The royalty suspension volume for each eligible lease is equal to each lease's actual production (or production allocated under an approved unit agreement) until the field's royalty suspension volume is reached.

(d) This paragraph applies if we add an eligible lease to a field that has an established royalty suspension volume that we approved under part 203 of this title. This paragraph also applies to a field that has an established royalty suspension volume as a result of production starting from one or more eligible leases in the field. In situations covered by this paragraph:

(1) The field's royalty suspension volume will not change, even if the added lease is in deeper water;

(2) If we granted a royalty suspension volume under part 203 of this title that is larger than the minimum specified for that water depth, the added eligible lease may share in the larger suspension volume;

(3) The eligible lease may receive a royalty suspension volume only to the extent of its production before the cumulative production equals the field's previously established royalty suspension volume; and

(4) Only production from leases entitled to share in the field's previously established royalty suspension volume counts as part of this cumulative production.

(e) A pre-Act lease may receive a royalty suspension volume under part 203 of this title for a field that already has a royalty suspension volume due to eligible leases. If this happens, then:

(1) The eligible and pre-Act leases share a single royalty suspension volume;

(2) The field's royalty suspension volume is the larger of the volume for the eligible leases or the volume MMS grants in response to the pre-Act leases' application; and

(3) The suspension volume for each eligible lease is its actual production from the lease until cumulative production from all leases in the field entitled to share in the field-based suspension volume equals the suspension volume.

(f) If we reassign a well on an eligible lease to another field, the past production from that well:

(1) Will count toward the royalty suspension volume, if any, specified for the field to which it is reassigned; and

(2) Will not count toward the royalty suspension volume, if any, for the field from which it was reassigned.

Browse Previous