The four general royalty relief categories in the Gulf of Mexico Region are Deepwater, Shallow Water Deep Gas, End-of-Life, and Special Case.  MMS has a formal program for the Deepwater, Deep Gas, and End-of-Life categories.  There is no formal structure for the Special Relief category.  MMS encourages operators to contact our staff directly to discuss the details of any potential submittal in order to expedite the process.  For further information, contact Mr. Al Durr at (504) 736-2659.

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1. Deepwater
   
   Deepwater royalty relief consists of discretionary relief and relief that does not require an economic evaluation.  Discretionary relief requires an application demonstrating economic need whereas there is no application process for the relief that does not require an economic evaluation.  

   Discretionary relief applies to "fields" with leases issued prior to passage of the Deepwater Royalty Relief Act of 1995 (i.e., November 28, 1995) in water depths 200 meters or deeper that lie wholly west of 87 degrees, 30 minutes West longitude.  These leases are called pre-Act leases.  By regulation, deepwater royalty relief for pre-Act leases can not be approved for "fields" containing a current lease that produced prior to the passage of the Act.

   Relief not requiring an economic evaluation applies to leases issued from sales held in years 1996 through 2000 in water depths 200 meters or deeper that lie wholly west of 87 degrees, 30 minutes West longitude.  These leases are called "eligible" leases.  Pursuant to the decision by the United States Court of Appeals for the fifth Circuit in Santa Fe Synder Corp., et al. v. Norton, deepwater royalty relief for "eligible leases" is no longer applicable on a "field" basis [See Information to Lessees and Operatorys (ITL) dated August 8, 2005].  Eligible leases may also be able to apply for discretionary relief under End-of-Life and Special Case Relief programs.  

   In addition, leases resulting from a Sale held after year 2000 may be issued with a designated royalty suspension volume on a "lease" basis.  Post-2000 leases issued with a designated royalty suspension volume are called "Royalty Suspension" leases.  The Lease Instrument and Final Notice of Sale specify the applicable water depth categories and royalty suspension volumes.  All Post-2000 leases in water depths greater than 200 meters are also eligible to apply for discretionary relief.  

   Please refer to the regulations and guidelines listed below for more information.

   1. "Pre-Act" Lease Information

      Regulations for Discretionary Relief (See 30 CFR 203.60-91)
      
      Guidelines for the Application, Review, Approval, and Administration of the Deepwater Royalty Relief Program For Pre-Act Leases and Post-2000 Leases - Appendix (I), NTL No. 2002-N02; Effective:  February 14, 2002

      Deepwater Royalty Relief Economic Model:  Economic Model Documentation, Model Spreadsheet, and Example Files

      Economic Assumptions for RSVP Deep Water Royalty Relief Model - Click on "Most Recent Parameter Updates" under Key Documents and Sources.

      Application Fees for Royalty Relief Requests - NTL. No. 98-5N

      Field Naming Handbook, March 1996 - A guide and reference document to the field naming process for leases with qualifying oil and gas discoveries.  Updated December 1997.

   2. Post-Act "Eligible" Lease Information

      Deepwater Royalty Relief Regulations for Eligible Leases (See 30 CFR 260.112-117)

      Amended Deepwater Royalty Relief Regulations for Eligible Leases  (October 7, 2008)

   3. "Post-2000" Lease Information

      Designated Royalty Suspension Provisions –

      Deepwater Royalty Relief Regulations for Royalty Suspension Leases (See 30 CFR 260.120-124)

      Refer to your Lease Instrument and/or Final Notice of Sale starting with Sale 178, Part1.

      Discretionary Royalty Suspension Provisions -  

      Regulations for Discretionary Relief (See 30 CFR 203.60-91)
      
      Guidelines for the Application, Review, Approval, and Administration of the Deepwater Royalty Relief Program For Pre-Act Leases and Post-2000 Leases - Appendix (I), NTL No. 2002-N02; Effective:  February 14, 2002

      Deepwater Royalty Relief Economic Model:  Economic Model Documentation, Model Spreadsheet, and Example Files

      Economic Assumptions for RSVP Deep Water Royalty Relief Model - Click on "Most Recent Parameter Updates" under Key Documents and Sources.

      Application Fees for Royalty Relief Requests - NTL. No. 98-5N

2. Shallow Water Deep Gas Incentives

   As stipulated in the Lease Instrument and Final Notice of Lease Sale, certain leases may be eligible for a royalty suspension volume for shallow water (< 200 meters) deep gas production.  Refer to your Lease Instrument and the following:

   Final Notice of Sale for Central Gulf of Mexico Lease Sale 178, Part 1

   Final Notice of Sale for Western Gulf of Mexico Lease Sale 180

   Final Notice of Sale for Central Gulf of Mexico Lease Sale 182

   Final Notice of Sale for Western Gulf of Mexico Lease Sale 184

   Final Notice of Sale for Central Gulf of Mexico Lease Sale 185

   Final Notice of Sale for Western Gulf of Mexico Lease Sale 187

   Pursuant to 30 CFR 203.48, most of these leases have converted to the deep gas royalty relief provisions in the final rule.

   In addition to leases with shallow water deep gas royalty relief provisions in their Lease Instruments, certain other leases may be eligible for shallow water deep gas royalty relief through the Deep Gas in Shallow Water Rule.  For additional information, please refer to the following sources:

   Deep Gas in Shallow Water Final Rule  (January 26, 2004)

   Deep Gas in Shallow Water Final Rule - Technical Amendments  (April 30, 2004)

   Relief or Reduction in Royalty Under Certain Federal Oil and Gas Leases on the Outer Continental Shelf  (April 30, 2004)

   Correction to the Deep Gas in Shallow Water Final Rule - Technical Amendments  (May 7, 2004)

   Amended Deep Gas Royalty Relief Regulations  (November 18, 2008)

3. End-of-Life Royalty Relief

   End-of-life relief is applicable to producing leases regardless of water depth when it can be shown that the economic limit has been reached and relief will result in "increased production."  If approved, the royalty rate will be reduced by half subject to certain stipulations.  Please refer to the regulations and guidelines listed below for more information.

   Regulations for Discretionary Relief (See 30 CFR 203.50-56)

   Guidelines for the Application, Review, Approval, and Administration of the Royalty Relief for End-of-Life Leases;  Appendix (II), NTL No. 02-N02; Effective February 14, 2002

   End-Of-Life Leases Spreadsheet (Excel)

   Application Fees for Royalty Relief Requests Under 30 CFR 203 - NTL No. 98-5N

4. Special Case Relief

   Relief can be requested when our formal programs provide inadequate encouragement to increase production or development.  Other conditions must also be met in order to submit an application.  If you believe your situation meets the conditions for special case relief, you should submit data and arguments to the Regional Supervisor for Production and Development in the Gulf Of Mexico Region.  If we agree you meet the required conditions, guidance will be provided concerning the application and the appropriate fee.  For more details, please refer to the information listed below.

   Regulations for Discretionary Relief (See 30 CFR 203.80)

   Economic Assumptions for RSVP Deep Water Royalty Relief Model - Click on "Most Recent Parameter Updates" under Key Documents and Sources.

5. General Information

   Oil and Gas Price Thresholds

   Listing of Deepwater Royalty Relief Applications

   News Releases related to Deepwater Royalty Relief