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Notes

30 C.F.R. §§ 203.30–203.36

7 sections in range

§203.30. Which leases are eligible for royalty relief as a result of drilling a phase 2 or phase 3 ultra-deep well?

30 C.F.R. § 203.30

Your lease may receive a royalty suspension volume (RSV) under §§ 203.31 through 203.36 if the lease meets all the requirements of this section.
(a)
The lease is located in the GOA wholly west of 87 degrees, 30 minutes West longitude in water depths entirely less than 400 meters deep.
(b)
The lease has not produced gas or oil from a deep well or an ultra-deep well, except as provided in § 203.31(b).
(c)
If the lease is located entirely in more than 200 meters and entirely less than 400 meters of water, it must either:
(1)
Have been issued before November 28, 1995, and not been granted deep water royalty relief under 43 U.S.C. 1337(a)(3)(C), added by section 302 of the Deep Water Royalty Relief Act; or
(2)
Have been issued after November 28, 2000, and not been granted deep water royalty relief under §§ 203.60 through 203.79.
Notes, amendments, and revision history

Amendments

[76 FR 64462, Oct. 18, 2011, as amended at 90 FR 44325, Sept. 15, 2025]

Authority

Authority: 25 U.S.C. 396 et seq.; 25 U.S.C. 396a et seq.; 25 U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.; 30 U.S.C. 1001 et seq.; 30 U.S.C. 1701 et seq.; 31 U.S.C. 9701; 42 U.S.C. 15903-15906; 43 U.S.C. 1301 et seq.; 43 U.S.C. 1331 et seq.; and 43 U.S.C. 1801 et seq.

Source

Source: 76 FR 64462, Oct. 18, 2011, unless otherwise noted.

Amendments

[76 FR 64462, Oct. 18, 2011, as amended at 90 FR 44325, Sept. 15, 2025]

§203.31. If I have a qualified phase 2 or qualified phase 3 ultra-deep well, what royalty relief would that well earn for my lease?

30 C.F.R. § 203.31

(a)
Subject to the administrative requirements of § 203.35 and the price conditions in § 203.36, your qualified well earns your lease an RSV shown in the following table in billions of cubic feet (BCF) or in thousands of cubic feet (MCF) as prescribed in § 203.33:
(b)
(1)
This paragraph applies if your lease:
(i)
Has produced gas or oil from a deep well with a perforated interval the top of which is less than 18,000 feet TVD SS;
(ii)
Was issued in a lease sale held between January 1, 2004, and December 31, 2005; and
(iii)
The terms of your lease expressly incorporate the provisions of §§ 203.41 through 203.47 as they existed at the time the lease was issued.
(2)
Subject to the administrative requirements of § 203.35 and the price conditions in § 203.36, your qualified well earns your lease an RSV shown in the following table in BCF or MCF as prescribed in § 203.33:
(c)
Lessees may request a refund of or recoup royalties paid on production from qualified phase 2 or phase 3 ultra-deep wells that:
(1)
Occurs before December 18, 2008, and
(2)
Is subject to application of an RSV under either § 203.31 or § 203.41.
(d)
The following examples illustrate how this section applies. These examples assume that your lease is located in the GOA west of 87 degrees, 30 minutes West longitude and in water less than 400 meters deep (see § 203.30(a)), has no existing deep or ultra-deep wells and that the price thresholds prescribed in § 203.36 have not been exceeded.
Notes, amendments, and revision history

Amendments

[76 FR 64462, Oct. 18, 2011, as amended at 90 FR 44325, Sept. 15, 2025]

Authority

Authority: 25 U.S.C. 396 et seq.; 25 U.S.C. 396a et seq.; 25 U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.; 30 U.S.C. 1001 et seq.; 30 U.S.C. 1701 et seq.; 31 U.S.C. 9701; 42 U.S.C. 15903-15906; 43 U.S.C. 1301 et seq.; 43 U.S.C. 1331 et seq.; and 43 U.S.C. 1801 et seq.

Source

Source: 76 FR 64462, Oct. 18, 2011, unless otherwise noted.

Amendments

[76 FR 64462, Oct. 18, 2011, as amended at 90 FR 44325, Sept. 15, 2025]

§203.32. What other requirements or restrictions apply to royalty relief for a qualified phase 2 or phase 3 ultra-deep well?

30 C.F.R. § 203.32

(a)
If a qualified ultra-deep well on your lease is within a unitized portion of your lease, the RSV earned by that well under this section applies only to your lease and not to other leases within the unit or to the unit as a whole.
(b)
If your qualified ultra-deep well is a directional well (either an original well or a sidetrack) drilled across a lease line, then either:
(1)
The lease with the perforated interval that initially produces earns the RSV or
(2)
If the perforated interval crosses a lease line, the lease where the surface of the well is located earns the RSV.
(c)
Any RSV earned under § 203.31 is in addition to any royalty suspension supplement (RSS) for your lease under § 203.45 that results from a different wellbore.
(d)
If your lease earns an RSV under § 203.31 and later produces from a deep well that is not a qualified well, the RSV is not forfeited or terminated, but you may not apply the RSV earned under § 203.31 to production from the non-qualified well.
(e)
You owe minimum royalties or rentals in accordance with your lease terms notwithstanding any RSVs allowed under paragraphs (a) and (b) of § 203.31.
(f)
Unused RSVs transfer to a successor lessee and expire with the lease.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396 et seq.; 25 U.S.C. 396a et seq.; 25 U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.; 30 U.S.C. 1001 et seq.; 30 U.S.C. 1701 et seq.; 31 U.S.C. 9701; 42 U.S.C. 15903-15906; 43 U.S.C. 1301 et seq.; 43 U.S.C. 1331 et seq.; and 43 U.S.C. 1801 et seq.

Source

Source: 76 FR 64462, Oct. 18, 2011, unless otherwise noted.

§203.33. To which production do I apply the RSV earned by qualified phase 2 and phase 3 ultra-deep wells on my lease or in my unit?

30 C.F.R. § 203.33

(a)
You must apply the RSV allowed in § 203.31(a) and (b) to gas volumes produced from qualified wells on or after May 18, 2007, reported on the Oil and Gas Operations Report, Part A (OGOR-A) for your lease under 30 CFR 1210.102. All gas production from qualified wells reported on the OGOR-A, including production not subject to royalty, counts toward the total lease RSV earned by both deep or ultra-deep wells on the lease.
(b)
This paragraph applies to any lease with a qualified phase 2 or phase 3 ultra-deep well that is not within a BSEE-approved unit. Subject to the price conditions of § 203.36, you must apply the RSV prescribed in § 203.31 as required under the following paragraphs (b)(1) and (b)(2) of this section.
(1)
You must apply the RSV to the earliest gas production occurring on and after the later of May 18, 2007, or the date the first qualified phase 2 or phase 3 ultra-deep well that earns your lease the RSV begins production (other than test production).
(2)
You must apply the RSV to only gas production from qualified wells on your lease, regardless of their depth, for which you have met the requirements in § 203.35 or § 203.44.
(c)
This paragraph applies to any lease with a qualified phase 2 or phase 3 ultra-deep well where all or part of the lease is within a BSEE-approved unit. Under the unit agreement, a share of the production from all the qualified wells in the unit participating area would be allocated to your lease each month according to the participating area percentages. Subject to the price conditions of § 203.36, you must apply the RSV prescribed in § 203.31 as follows:
(1)
You must apply the RSV to the earliest gas production occurring on and after the later of May 18, 2007, or the date that the first qualified phase 2 or phase 3 ultra-deep well that earns your lease the RSV begins production (other than test production).
(2)
You must apply the RSV to only gas production:
(i)
From qualified wells on the non-unitized area of your lease, regardless of their depth, for which you have met the requirements in § 203.35 or § 203.44; and
(ii)
Allocated to your lease under a BSEE-approved unit agreement from qualified wells on unitized areas of your lease and on other leases in participating areas of the unit, regardless of their depth, for which the requirements in § 203.35 or § 203.44 have been met. The allocated share under paragraph (a)(2)(ii) of this section does not increase the RSV for your lease.
(d)
You must begin paying royalties when the cumulative production of gas from all qualified wells on your lease, or allocated to your lease under paragraph (b) of this section, reaches the applicable RSV allowed under § 203.31 or § 203.41. For the month in which cumulative production reaches this RSV, you owe royalties on the portion of gas production from or allocated to your lease that exceeds the RSV remaining at the beginning of that month.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396 et seq.; 25 U.S.C. 396a et seq.; 25 U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.; 30 U.S.C. 1001 et seq.; 30 U.S.C. 1701 et seq.; 31 U.S.C. 9701; 42 U.S.C. 15903-15906; 43 U.S.C. 1301 et seq.; 43 U.S.C. 1331 et seq.; and 43 U.S.C. 1801 et seq.

Source

Source: 76 FR 64462, Oct. 18, 2011, unless otherwise noted.

§203.34. To which production may an RSV earned by qualified phase 2 and phase 3 ultra-deep wells on my lease not be applied?

30 C.F.R. § 203.34

You may not apply an RSV earned under § 203.31:
(a)
To production from completions less than 15,000 feet TVD SS, except in cases where the qualified well is re-perforated in the same reservoir previously perforated deeper than 15,000 feet TVD SS;
(b)
To production from a deep well or ultra-deep well on any other lease, except as provided in paragraph (c) of § 203.33;
(c)
To any liquid hydrocarbon (oil and condensate) volumes; or
(d)
To production from a deep well or ultra-deep well that commenced drilling before—
(1)
March 26, 2003, on a lease that is located entirely or partly in water less than 200 meters deep; or
(2)
May 18, 2007, on a lease that is located entirely in water more than 200 meters deep.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396 et seq.; 25 U.S.C. 396a et seq.; 25 U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.; 30 U.S.C. 1001 et seq.; 30 U.S.C. 1701 et seq.; 31 U.S.C. 9701; 42 U.S.C. 15903-15906; 43 U.S.C. 1301 et seq.; 43 U.S.C. 1331 et seq.; and 43 U.S.C. 1801 et seq.

Source

Source: 76 FR 64462, Oct. 18, 2011, unless otherwise noted.

§203.35. What administrative steps must I take to use the RSV earned by a qualified phase 2 or phase 3 ultra-deep well?

30 C.F.R. § 203.35

To use an RSV earned under § 203.31:
(a)
You must notify the BSEE Regional Supervisor for Production and Development in writing of your intent to begin drilling operations on all your ultra-deep wells.
(b)
Before beginning production, you must meet any production measurement requirements that the BSEE Regional Supervisor for Production and Development has determined are necessary under 30 CFR part 250, subpart L.
(c)
(1)
Within 30 days of the beginning of production from any wells that would become qualified phase 2 or phase 3 ultra-deep wells by satisfying the requirements of this section:
(i)
Provide written notification to the BSEE Regional Supervisor for Production and Development that production has begun; and
(ii)
Request confirmation of the size of the RSV earned by your lease.
(2)
If you produced from a qualified phase 2 or phase 3 ultra-deep well before December 18, 2008, you must provide the information in paragraph (c)(1) of this section no later than January 20, 2009.
(d)
If you cannot produce from a well that otherwise meets the criteria for a qualified phase 2 ultra-deep well that is an ultra-deep short sidetrack before May 3, 2009, on a lease that is located entirely or partly in water less than 200 meters deep, or before May 3, 2013, on a lease that is located entirely in water more than 200 meters but less than 400 meters deep, the BSEE Regional Supervisor for Production and Development may extend the deadline for beginning production for up to 1 year, based on the circumstances of the particular well involved, if it meets all the following criteria.
(1)
The delay occurred after drilling reached the total depth in your well.
(2)
Production (other than test production) was expected to begin from the well before May 3, 2009, on a lease that is located entirely or partly in water less than 200 meters deep or before May 3, 2013, on a lease that is located entirely in water more than 200 meters but less than 400 meters deep. You must provide a credible activity schedule with supporting documentation.
(3)
The delay in beginning production is for reasons beyond your control, such as adverse weather and accidents which BSEE deems were unavoidable.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396 et seq.; 25 U.S.C. 396a et seq.; 25 U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.; 30 U.S.C. 1001 et seq.; 30 U.S.C. 1701 et seq.; 31 U.S.C. 9701; 42 U.S.C. 15903-15906; 43 U.S.C. 1301 et seq.; 43 U.S.C. 1331 et seq.; and 43 U.S.C. 1801 et seq.

Source

Source: 76 FR 64462, Oct. 18, 2011, unless otherwise noted.

§203.36. Do I keep royalty relief if prices rise significantly?

30 C.F.R. § 203.36

(a)
You must pay the Office of Natural Resources Revenue royalties on all gas production to which an RSV otherwise would be applied under § 203.33 for any calendar year in which the average daily closing New York Mercantile Exchange (NYMEX) natural gas price exceeds the applicable threshold price shown in the following table.
(b)
For purposes of paragraph (a) of this section, determine the threshold price for any calendar year after 2007 by:
(1)
Determining the percentage of change during the year in the Department of Commerce's implicit price deflator for the gross domestic product; and
(2)
Adjusting the threshold price for the previous year by that percentage.
(c)
The following examples illustrate how this section applies.
(d)
You must pay any royalty due under this section no later than March 31 of the year following the calendar year for which you owe royalty. If you do not pay by that date, you must pay late payment interest under 30 CFR 1218.54 from April 1 until the date of payment.
(e)
Production volumes on which you must pay royalty under this section count as part of your RSV.
Notes, amendments, and revision history

Authority

Authority: 25 U.S.C. 396 et seq.; 25 U.S.C. 396a et seq.; 25 U.S.C. 2101 et seq.; 30 U.S.C. 181 et seq.; 30 U.S.C. 351 et seq.; 30 U.S.C. 1001 et seq.; 30 U.S.C. 1701 et seq.; 31 U.S.C. 9701; 42 U.S.C. 15903-15906; 43 U.S.C. 1301 et seq.; 43 U.S.C. 1331 et seq.; and 43 U.S.C. 1801 et seq.

Source

Source: 76 FR 64462, Oct. 18, 2011, unless otherwise noted.