Mystery mistake provides oil, gas companies with major windfall

H. Josef Hebert
Associated Press
Fort Lauderdale Sun Sentinel
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Washington (US):
What may have been a simple error -- or perhaps something more ominous -- has given a multimillion-dollar windfall to a group of oil and gas companies and could cost the government billions of dollars more in the years to come.
The Interior Department disclosed Wednesday that a provision was mysteriously deleted from hundreds of federal drilling leases in the late 1990s that would have required producers to pay royalties, once prices reached a certain level, on oil or gas taken from deep waters of the Gulf of Mexico.
In 1995, Congress exempted deep-water oil from royalty payments to spur development. But a price threshold was included in leases issued in 1996 and 1997 and again in leases sold in each year since 2000 that reinstates the royalties if market prices reach a certain level.
For some reason the language ``was inadvertently dropped'' from an addendum attached to more than 1,100 leases the Interior Department's Minerals Management Service issued for 1998 and 1999.
Mar 02, 2006