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Notice

Oil and Gas Leasing: Fees, Rentals and Royalty

Document Details

Information about this document as published in the Federal Register.

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This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

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AGENCY:

Bureau of Land Management, Interior.

ACTION:

Notification to suspend all royalty reductions granted under the heavy oil program and termination of the availability of further heavy oil royalty relief and request for comment.

SUMMARY:

The Bureau of Land Management (BLM) is providing the six-month notification to suspend all royalty reductions for the production of heavy oil under the regulations at 43 CFR 3103.4-3(b)(6)(i) and of the termination of availability of further heavy oil relief. In addition, BLM is requesting comments on the conditions under which the suspension of the program should end.

DATES:

This suspension of royalty reductions for the production of heavy oil is effective on November 1, 2005. You should submit your comments on the suspension conditions to BLM at the address below on or before May 27, 2005. BLM may or may not consider any comments received after the above date in the decision-making process.

ADDRESSES:

Mail: Director (630), Bureau of Land Management, Eastern States Office, 7450 Boston Boulevard, Springfield, Virginia 22153.

Personal or messenger delivery: 1620 L Street, NW., Suite 401, Washington, DC 20036.

Direct Internet: http://www.blm.gov.nhp/​news/​regulatory/​index.html.

Internet E-mail: WOComments@blm.gov.

Federal eRulemaking Portal: http://www/​regulations.gov.

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FOR FURTHER INFORMATION CONTACT:

Rudy Baier, Fluid Minerals Group, Bureau of Land Management, (202) 452-5024 (Commercial or FTS). Persons who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339, 24 hours a day, seven days a week, except holidays, for assistance in reaching Mr. Baier.

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SUPPLEMENTARY INFORMATION:

Under 43 CFR 3103.4-3(b)(6)(i), BLM may suspend or terminate all heavy oil royalty reductions and terminate the availability of further heavy oil royalty relief “upon 6 month's notice in the Federal Register when BLM determines that the average oil price has remained above $24 per barrel over a period of 6 consecutive months (based on the WTI Crude average posted prices and adjusted for inflation using the implicit price deflator for gross national product with 1991 as the base year).” The adjusted threshold for the third quarter of calendar year 2004 was $30.83 and for the fourth quarter $31.00.

Based on our analysis, The WTI Crude average oil prices exceeded the adjusted threshold at all times during the last 6 months. Therefore, as authorized by 43 CFR 3103.4-3, this serves as notice that BLM will suspend the heavy oil royalty reduction program effective on November 1, 2005.

Therefore, beginning on the effective date of the suspension, those properties currently receiving relief under section 3103.4-3 must pay royalty in accordance with the royalty rate in the lease or other BLM-approved royalty rate reductions, such as the royalty rate reductions available for certain stripper well properties under 43 CFR 3103.4-2.

The regulations do not include any provisions addressing what action BLM must take to remove the suspension and re-initiate the heavy oil royalty rate reduction program. BLM proposes that the suspension be lifted upon notice in the Federal Register after BLM determines that the average oil price has remained below $24 per barrel over a period of 6 consecutive months (based on the WTI Crude average posted prices and adjusted for inflation using the Start Printed Page 21811implicit price deflator for gross national products with 1991 as the base year). BLM proposes that the effective date of the end of the suspension be the first day of the month more than 6 months after publication of the notice of re-initiation in the Federal Register.

In order to receive the benefits under the heavy oil royalty reduction program after the suspension ends, operators/payors must follow the regulations at 43 CFR 3103.4-3, including the requirement to notify BLM under § 3103.4-3(b).

BLM recognizes that the $24 per barrel trigger was instituted over 8 years ago and conditions since that time may have changed considerably. Therefore, BLM is requesting comments on the conditions under which a suspension should end. Specifically, BLM seeks comment on whether it should re-initiate relief sooner than 6 months after it publishes notice that the program is beginning again after 6 months of below-trigger prices. Please see the ADDRESSES section above for information on where to submit your comments.

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Dated: March 18, 2005.

Rebecca W. Watson,

Assistant Secretary, Land and Minerals Management.

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[FR Doc. 05-8362 Filed 4-26-05; 8:45 am]

BILLING CODE 4310-84-P