[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 318 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 318

 To provide for the energy security of the Nation through encouraging 
 the production of domestic oil and gas resources in deep water on the 
 Outer Continental Shelf in the Gulf of Mexico, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             February 4 (legislative day, January 5), 1993

  Mr. Johnston (for himself and Mr. Krueger) introduced the following 
bill; which was read twice and referred to the Committee on Energy and 
                           Natural Resources

_______________________________________________________________________

                                 A BILL


 
 To provide for the energy security of the Nation through encouraging 
 the production of domestic oil and gas resources in deep water on the 
 Outer Continental Shelf in the Gulf of Mexico, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, That this Act may be 
referred to as the ``Outer Continental Shelf Deep Water Royalty Relief 
Act''.
    Sec. 2. Amendments to the Outer Continental Shelf Lands Act.--The 
Outer Continental Shelf Lands Act, as amended, is amended by 
redesignating section 8(a)(3) (43 U.S.C. 1337(a)(3)) as section 
8(a)(3)(A) and by adding at the end thereof the following:
            ``(B) The Secretary may, in order to promote development 
        and new production on a producing or non-producing lease, 
        through primary, secondary, or tertiary recovery means, or to 
        encourage production of marginal or uneconomic resources on a 
        producing or non-producing lease, reduce or suspend any royalty 
        or net profit share set forth in the lease.
            ``(C)(i) Notwithstanding the provisions of this Act other 
        than this subparagraph, no royalty payment shall be due on new 
        production, as defined in clause (ii) of this subparagraph, 
        from any lease located in water depths of 200 meters or greater 
        in the Western and Central Planning Areas of the Gulf of Mexico 
        until the capital costs directly related to such new production 
        have been recovered by the lessee out of the proceeds from such 
        new production.
            ``(ii) For purposes of this subparagraph, the term--
                    ``(aa) `capital costs' shall be defined by the 
                Secretary and shall include exploration costs incurred 
                after the acquisition of the lease and development 
                costs directly related to new production. The terms 
                `exploration' and `development' shall have the same 
                meaning contained in subsections (k) and (l) of section 
                2 of this Act except the term `development' shall also 
                include any similar additional development activities 
                which take place after production has been initiated 
                from such lease. Such capital costs shall not include 
                any amounts paid as bonus bids but shall be adjusted to 
                reflect changes in the consumer price index, as defined 
                in section (1)(f)(4) of title 26 of the United States 
                Code; and
                    ``(bb) `new production' is--
                            ``(I) any production from a lease from 
                        which no royalties are due on production, other 
                        than test production, prior to the date of 
                        enactment of the Outer Continental Shelf Deep 
                        Water Royalty Relief Act; or
                            ``(II) any production resulting from lease 
                        development activities pursuant to a 
                        Development Operations Coordination Document 
                        approved by the Secretary after the date of 
                        enactment of the Outer Continental Shelf Deep 
                        Water Royalty Relief Act; and
            ``(iii) In any month during which the arithmetic average of 
        the closing prices for the earliest delivery month on the New 
        York Mercantile Exchange for Light Sweet crude oil exceeds 
        $28.00 per barrel, any production of oil subject to relief from 
        the requirement to pay royalties under clause (i) of this 
        subparagraph shall be subject to royalties at the lease 
        stipulated rate, and the lessee's gross proceeds from such oil 
        production, less Federal royalties, during such month shall be 
        counted toward the recovery of capital costs under clause (i) 
        of this subparagraph.
            ``(iv) In any month during which the arithmetic average of 
        the closing prices for the earliest delivery month on the New 
        York Mercantile Exchange for natural gas exceeds $3.50 per 
        million British thermal units, any production of natural gas 
        subject to relief from the requirement to pay royalties under 
        clause (i) of this subparagraph shall be subject to royalties 
        at the lease stipulated rate, and the lessee's gross proceeds 
        from such natural gas production, less Federal royalties, 
        during such month shall be counted toward the recovery of 
        capital costs under clause (i) of this subparagraph.
            ``(v) The prices referred to in clauses (iii) and (iv) of 
        this subparagraph shall be changed during any calendar year 
        after 1993 by the percentage if any by which the consumer price 
        index changed during the preceding calendar year, as defined in 
        section (1)(f)(4) of title 26 of the United States Code.''.
    Sec. 3. Regulations.--The Secretary shall promulgate such rules and 
regulations as are necessary to implement the provisions of this Act 
within one hundred and eighty days after the date of enactment of this 
Act.

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