42 USC 15903 - Marginal property production incentives

U.S Code last checked for updates: Nov 23, 2024

§ 15903.

Marginal property production incentives

(a)

Definition of marginal property

(b)

Conditions for reduction of royalty rate

Until such time as the Secretary issues regulations under subsection (e) that prescribe different standards or requirements, the Secretary shall reduce the royalty rate on—

(1)

oil production from marginal properties as prescribed in subsection (c) if the spot price of West Texas Intermediate crude oil at Cushing, Oklahoma, is, on average, less than $15 per barrel (adjusted in accordance with the Consumer Price Index for all-urban consumers, United States city average, as published by the Bureau of Labor Statistics) for 90 consecutive trading days; and

(2)

gas production from marginal properties as prescribed in subsection (c) if the spot price of natural gas delivered at Henry Hub, Louisiana, is, on average, less than $2.00 per million British thermal units (adjusted in accordance with the Consumer Price Index for all-urban consumers, United States city average, as published by the Bureau of Labor Statistics) for 90 consecutive trading days.

(c)

Reduced royalty rate

(1)

In general

When a marginal property meets the conditions specified in subsection (b), the royalty rate shall be the lesser of—

(A)

5 percent; or

(B)

the applicable rate under any other statutory or regulatory royalty relief provision that applies to the affected production.

(2)

Period of effectiveness

(d)

Termination of reduced royalty rate

A royalty rate prescribed in subsection (c)(1) shall terminate—

(1)

with respect to oil production from a marginal property, on the first day of the production month following the date on which—

(A)

the spot price of West Texas Intermediate crude oil at Cushing, Oklahoma, on average, exceeds $15 per barrel (adjusted in accordance with the Consumer Price Index for all-urban consumers, United States city average, as published by the Bureau of Labor Statistics) for 90 consecutive trading days; or

(B)

the property no longer qualifies as a marginal property; and

(2)

with respect to gas production from a marginal property, on the first day of the production month following the date on which—

(A)

the spot price of natural gas delivered at Henry Hub, Louisiana, on average, exceeds $2.00 per million British thermal units (adjusted in accordance with the Consumer Price Index for all-urban consumers, United States city average, as published by the Bureau of Labor Statistics) for 90 consecutive trading days; or

(B)

the property no longer qualifies as a marginal property.

(e)

Regulations prescribing different relief

(1)

Discretionary regulations

(2)

Mandatory regulations

Unless a determination is made under paragraph (3), not later than 18 months after August 8, 2005, the Secretary shall by regulation—

(A)

prescribe standards and requirements for, and the extent of royalty relief for, marginal properties for oil and gas leases on the outer Continental Shelf; and

(B)

define what constitutes a marginal property on the outer Continental Shelf for purposes of this section.

(3)

Report

(4)

Considerations

In issuing regulations under this subsection, the Secretary may consider—

(A)

oil and gas prices and market trends;

(B)

production costs;

(C)

abandonment costs;

(D)

Federal and State tax provisions and the effects of those provisions on production economics;

(E)

other royalty relief programs;

(F)

regional differences in average wellhead prices;

(G)

national energy security issues; and

(H)

other relevant matters, as determined by the Secretary.

(f)

Savings provision

(Pub. L. 109–58, title III, § 343, Aug. 8, 2005, 119 Stat. 700.)

cite as: 42 USC 15903