If we approve your application, subject to certain conditions, we will not collect royalties on a specified suspension volume for your field, development project, or expansion project. Suspension volumes include volumes allocated to a lease under an approved unit agreement, but exclude any volumes of production that are not normally royalty-bearing under the lease or the regulations of this chapter (e.g., fuel gas).
(a) For authorized fields, the minimum royalty-suspension volumes are:
(1) 17.5 million barrels of oil equivalent (MMBOE) for fields in 200 to 400 meters of water;
(2) 52.5 MMBOE for fields in 400 to 800 meters of water; and
(3) 87.5 MMBOE for fields in more than 800 meters of water.
(b) For development projects, any relief we grant applies only to project wells and replaces the royalty relief, if any, with which we issued your lease.
(c) If your project is economic given the royalty relief with which we issued your lease, we will reject the application.
(d) If the lease has earned or may earn deep gas royalty relief under Sec. Sec. 203.40 through 203.49 or ultra-deep gas royalty relief under Sec. Sec. 203.30 through 203.36, we will take the deep gas royalty relief or ultra-deep gas royalty relief into account in determining whether further royalty relief for a development project is necessary for production to be economic.
(e) If neither paragraph (c) nor (d) of this section apply, the minimum royalty suspension volumes are as shown in the following table: ------------------------------------------------------------------------
The minimum royalty
For . . . suspension volume is . Plus . . .
(1) RS leases in the GOM or A volume equal to the 10 percent of
leases offshore Alaska, combined royalty the median of
suspension volumes the
(or the volume distribution of
equivalent based on known
the data in your recoverable
approved application resources upon
for other forms of which BSEE
royalty suspension) based approval
with which BSEE of your
issued the leases application
participating in the from all
application that have reservoirs
or plan a well into a included in the
reservoir identified project.
in the application,(2) Leases offshore Alaska or A volume equal to 10
other deep water GOM leases percent of the median
issued in sales after of the distribution
November 28, 2000, of known recoverable
resources upon which
BSEE based approval
of your application
from all reservoirs
included in the
project.------------------------------------------------------------------------
(f) If your application includes pre-Act leases in different categories of water depth, we apply the minimum royalty suspension volume for the deepest such lease then assigned to the field. We base the water depth and makeup of a field on the water-depth delineations in the ``Lease Terms and Economic Conditions'' map and the ``Fields Directory'' documents and updates in effect at the time your application is deemed complete. These publications are available from the BSEE Gulf of Mexico Regional Office.
(g) You will get a royalty suspension volume above the minimum if we determine that you need more to make the field or development project economic.
(h) For expansion projects, the minimum royalty suspension volume equals 10 percent of the median of the distribution of known recoverable resources upon which we based approval of your application from all reservoirs included in your project plus any suspension volumes required under Sec. 203.66. If we determine that your expansion project may be economic only with more relief, we will determine and grant you the royalty suspension volume necessary to make the project economic.
(i) The royalty suspension volume applicable to specific leases will continue through the end of the month in which cumulative production reaches that volume. You must calculate cumulative production from all the leases in the authorized field or project that are entitled to share the royalty suspension volume.