[Federal Register Volume 70, Number 80 (Wednesday, April 27, 2005)]
[Notices]
[Pages 21810-21811]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-8362]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

[WO-310-1310-PB-24 1A]


Oil and Gas Leasing: Fees, Rentals and Royalty

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.

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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: [email protected].
    Federal eRulemaking Portal: http://www/regulations.gov.

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.

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

[[Page 21811]]

implicit 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 Sec.  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.

    Dated: March 18, 2005.
Rebecca W. Watson,
Assistant Secretary, Land and Minerals Management.
[FR Doc. 05-8362 Filed 4-26-05; 8:45 am]
BILLING CODE 4310-84-P