US senators press Frist for vote ending deepwater royalty relief

Washington (Platts)--26Jun2006

One of the US Senate's most conservative members Monday joined with one
of its most liberal ones in asking Majority Leader Bill Frist,
Republican-Tennessee, for a vote in the next month on a bill that would end
deepwater royalty relief.

Senator John Kyl, Republican-Arizona, and Ron Wyden, Democrat-Oregon
requested that Frist schedule debate of a bill ending unlimited royalty relief
available to companies who were issued deepwater leases in 1998 and 1999.
Federal officials failed to include price thresholds in those leases, as
required under a 1995 law, and the mistake is expected to cost the government
$10 billion.

Kyl, Wyden and centrists Joseph Lieberman, Democrat-Connecticut, and
Olympia Snowe, Republican-Maine, want the Senate to require the government to
add price thresholds to leases lacking them. The House passed a bill in May
that would prevent the Interior Department from issuing new leases to the
owners of the 1998/1999 leases unless they agree to renegotiate the contracts.

"The Minerals Management Service has said the failure to include price
thresholds was not intentional, but a costly mistake -- and one that must be
corrected with some help from Congress," the senators wrote, saying the 1995
royalty relief law has helped deepwater production grow 400%. "With oil and
[natural] gas prices at historic levels, there is no good reason for royalty
relief incentives."

--Mike Schmidt, mike_schmidt@platts.com

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