[Code of Federal Regulations]
[Title 30, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 30CFR203.78]

[Page 28]
 
                       TITLE 30--MINERAL RESOURCES
 
                       DEPARTMENT OF THE INTERIOR
 
PART 203--RELIEF OR REDUCTION IN ROYALTY RATES--Table of Contents
 
               Subpart B--OCS Oil, Gas, and Sulfur General
 
Sec. 203.78  Do I keep relief if prices rise significantly?

    If prices rise above a base price for light sweet crude oil or 
natural gas, set by statute for pre-Act leases, indicated in your 
original lease agreement or Notice of Sale for post-November 2000 deep 
water leases, you must pay full royalties as prescribed in this section. 
For post-November 2000 deepwater leases, price thresholds apply on a 
lease basis, so different leases on the same field, development project, 
or expansion project may have different price thresholds.
    (a) Suppose the arithmetic average of the daily closing NYMEX light 
sweet crude oil prices for the previous calendar year exceeds $28.00 per 
barrel, as adjusted in paragraph (f) of this section. In this case, we 
retract the royalty relief authorized in this section and you must:
    (1) Pay royalties on all oil production for the previous year at the 
lease stipulated royalty rate plus interest (under 30 U.S.C. 1721 and 
Sec. 218.54 of this chapter) by March 31 of the current calendar year, 
and
    (2) Pay royalties on all your oil production in the current year.
    (b) Suppose the arithmetic average of the daily closing NYMEX 
natural gas prices for the previous calendar year exceeds $3.50 per 
million British thermal units (Btu), as adjusted in paragraph (f) of 
this section. In this case, we retract the royalty relief authorized in 
this section and you must:
    (1) Pay royalties on all natural gas production for the previous 
year at the lease stipulated royalty rate plus interest (under 30 U.S.C. 
1721 and Sec. 218.54 of this chapter) by March 31 of the current 
calendar year, and
    (2) Pay royalties on all your natural gas production in the current 
year.
    (c) Production under both paragraphs (a) and (b) of this section 
counts as part of the royalty-suspension volume.
    (d) You are entitled to a refund or credit, with interest, of 
royalties paid on any production (that counts as part of the royalty-
suspension volume):
    (1) Of oil if the arithmetic average of the closing oil prices for 
the current calendar year is $28.00 per barrel or less, as adjusted in 
paragraph (f) of this section, and
    (2) Of gas if the arithmetic average of the closing natural gas 
prices for the current calendar year is $3.50 per million Btu or less, 
as adjusted in paragraph (f) of this section.
    (e) You must follow our regulations in part 230 of this chapter for 
receiving refunds or credits.
    (f) We change the prices referred to in paragraphs (a), (b), and (d) 
of this section periodically. For pre-Act leases, these prices change 
during each calendar year after 1994 by the percentage that the implicit 
price deflator for the gross domestic product changed during the 
preceding calendar year. For post-November 2000 deepwater leases, these 
prices change as indicated in the lease instrument or in the Notice of 
Sale under which we issued the lease.

[63 FR 2618, Jan. 16, 1998, as amended at 67 FR 1878, Jan. 15, 2002]