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30 C.F.R. §§ 203.40–203.48

9 sections in range

§203.40. Which leases are eligible for royalty relief as a result of drilling a deep well or a phase 1 ultra-deep well?

30 C.F.R. § 203.40

Your lease may receive an RSV under §§ 203.41 through 203.44, and may receive an RSS under §§ 203.45 through 203.47, if it 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 well with a perforated interval the top of which is 18,000 feet TVD SS or deeper that commenced drilling either:
(1)
Before March 26, 2003, on a lease that is located partly or entirely in water less than 200 meters deep; or
(2)
Before May 18, 2007, on a lease that is located in water entirely more than 200 meters and entirely less than 400 meters deep.
(c)
In the case of a lease located partly or entirely in water less than 200 meters deep, the lease was issued in a lease sale held either:
(1)
Before January 1, 2001;
(2)
On or after January 1, 2001, and before January 1, 2004, and, in cases where the original lease terms provided for an RSV for deep gas production, the lessee has exercised the option provided for in § 203.49; or
(3)
On or after January 1, 2004, and the lease terms provide for royalty relief under §§ 203.41 through 203.47. (Note: Because the original § 203.41 has been divided into new §§ 203.41 and 203.42 and subsequent sections have been redesignated as §§ 203.43 through 203.48, royalty relief in lease terms for leases issued on or after January 1, 2004, should be read as referring to §§ 203.41 through 203.48.)
(d)
If the lease is located entirely in more than 200 meters and 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]

§203.41. If I have a qualified deep well or a qualified phase 1 ultra-deep well, what royalty relief would my lease earn?

30 C.F.R. § 203.41

(a)
To qualify for a suspension volume under paragraphs (b) or (c) of this section, your lease must meet the requirements in § 203.40 and the requirements in the following table.
(b)
If your lease meets the requirements in paragraph (a)(1) of this section, it earns the RSV prescribed in the following table:
(c)
If your lease meets the requirements in paragraph (a)(2) of this section, it earns the RSV prescribed in the following table. The RSV specified in this paragraph is in addition to any RSV your lease already may have earned from a qualified deep well with a perforated interval whose top is from 15,000 feet to less than 18,000 feet TVD SS.
(d)
Lessees may request a refund of or recoup royalties paid on production from qualified wells on a lease that is located in water entirely deeper than 200 meters but entirely less than 400 meters deep that:
(1)
Occurs before December 18, 2008; and
(2)
Is subject to application of an RSV under either § 203.31 or § 203.41.
(e)
The following examples illustrate how this section applies, assuming your lease meets the location, prior production, and lease issuance conditions in § 203.40 and paragraph (a) of this section:
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.

§203.42. What conditions and limitations apply to royalty relief for deep wells and phase 1 ultra-deep wells?

30 C.F.R. § 203.42

The conditions and limitations in the following table apply to royalty relief under § 203.41.
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.

§203.43. To which production do I apply the RSV earned from qualified deep wells or qualified phase 1 ultra-deep wells on my lease?

30 C.F.R. § 203.43

(a)
You must apply the RSV prescribed in § 203.41(b) and (c) to gas volumes produced from qualified wells on or after May 3, 2004, reported on the OGOR-A for your lease under 30 CFR 1210.102, as and to the extent prescribed in §§ 203.43 and 203.48.
(1)
Except as provided in paragraph (a)(2) of this section, all gas production from qualified wells reported on the OGOR-A, including production that is not subject to royalty, counts toward the lease RSV.
(2)
Production to which an RSS applies under §§ 203.45 and 203.46 does not count toward the lease RSV.
(b)
This paragraph applies to any lease with a qualified deep well or qualified phase 1 ultra-deep well when no part of the lease is within a BSEE-approved unit. Subject to the price conditions in § 203.48, you must apply the RSV prescribed in § 203.41 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:
(i)
May 3, 2004, for an RSV earned by a qualified deep well or qualified phase 1 ultra-deep well on a lease that is located entirely or partly in water less than 200 meters deep;
(ii)
May 18, 2007, for an RSV earned by a qualified deep well on a lease that is located entirely in water more than 200 meters deep; or
(iii)
The date that the first qualified 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 deep well or qualified phase 1 ultra-deep well when 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 in § 203.48, you must apply the RSV prescribed under § 203.41 as required under the following paragraphs (c)(1) through (3) of this section.
(1)
You must apply the RSV to the earliest gas production occurring on and after the later of:
(i)
May 3, 2004, for an RSV earned by a qualified well or qualified phase 1 ultra-deep well on a lease that is located entirely or partly in water less than 200 meters deep;
(ii)
May 18, 2007, for an RSV earned by a qualified deep well on a lease that is located entirely in water more than 200 meters deep; or
(iii)
The date that the first qualified 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 all 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 unitized areas of other leases in the unit, regardless of their depth, for which the requirements in § 203.35 or § 203.44 have been met.
(3)
The allocated share under paragraph (c)(2)(ii) of this section does not increase the RSV for your lease. None of the volumes produced from a well that is not within a unit participating area may be allocated to other leases in the unit.
(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 (c) 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 that exceeds the RSV remaining at the beginning of that month.
(e)
You may not apply the RSV allowed under § 203.41 to:
(1)
Production from completions less than 15,000 feet TVD SS, except in cases where the qualified deep well is re-perforated in the same reservoir previously perforated deeper than 15,000 feet TVD SS;
(2)
Production from a deep well or phase 1 ultra-deep well on any other lease, except as provided in paragraph (c) of this section;
(3)
Any liquid hydrocarbon (oil and condensate) volumes; or
(4)
Production from a deep well or phase 1 ultra-deep well that commenced drilling before—
(i)
March 26, 2003, on a lease that is located entirely or partly in water less than 200 meters deep, or
(ii)
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.

§203.44. What administrative steps must I take to use the royalty suspension volume?

30 C.F.R. § 203.44

(a)
You must notify the BSEE Regional Supervisor for Production and Development in writing of your intent to begin drilling operations on all deep wells and phase 1 ultra-deep wells; and
(b)
Within 30 days of the beginning of production from all wells that would become qualified wells by satisfying the requirements of this section, you must:
(1)
Provide written notification to the BSEE Regional Supervisor for Production and Development that production has begun; and
(2)
Request confirmation of the size of the royalty suspension volume earned by your lease.
(c)
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.
(d)
You must provide the information in paragraph (b) of this section by January 20, 2009, if you produced before December 18, 2008, from a qualified deep well or qualified phase 1 ultra-deep well on a lease that is located entirely in water more than 200 meters and less than 400 meters deep.
(e)
The BSEE Regional Supervisor for Production and Development may extend the deadline for beginning production for up to one year for a well that cannot begin production before the applicable date prescribed in the definition of “qualified deep well” in § 203.0 if it meets all of the following criteria.
(1)
The well otherwise meets the criteria in the definition of a qualified deep well in § 203.0.
(2)
The delay in production occurred after reaching total depth in the well.
(3)
Production (other than test production) was expected to begin from the well before the applicable deadline in the definition of a qualified deep well in § 203.0. You must provide a credible activity schedule with supporting documentation.
(4)
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.

§203.45. If I drill a certified unsuccessful well, what royalty relief will my lease earn?

30 C.F.R. § 203.45

Your lease may earn a royalty suspension supplement. Subject to paragraph (d) of this section, the royalty suspension supplement is in addition to any royalty suspension volume your lease may earn under § 203.41.
(a)
If you drill a certified unsuccessful well and you satisfy the administrative requirements of § 203.47, subject to the price conditions in § 203.48, your lease earns an RSS shown in the following table. The RSS is shown in billions of cubic feet of gas equivalent (BCFE) or in thousands of cubic feet of gas equivalent (MCFE) and is applicable to oil and gas production as prescribed in § 203.46.
(b)
This paragraph applies to oil and gas volumes you report on the OGOR-A for your lease under 30 CFR 1210.102.
(1)
You must apply the RSS prescribed in paragraph (a) of this section, in accordance with the requirements in § 203.46, to all oil and gas produced from the lease:
(i)
On or after December 18, 2008, if your lease is located in water more than 200 meters but less than 400 meters deep; or
(ii)
On or after May 3, 2004, if your lease is located in water partly or entirely less than 200 meters deep.
(2)
Production to which an RSV applies under §§ 203.31 through 203.33 and §§ 203.41 through 203.43 does not count toward the lease RSS. All other production, including production that is not subject to royalty, counts toward the lease RSS.
(c)
The conversion from oil to gas for using the royalty suspension supplement is specified in § 203.73.
(d)
Each lease is eligible for up to two royalty suspension supplements. Therefore, the total royalty suspension supplement for a lease cannot exceed 10 BCFE.
(1)
You may not earn more than one royalty suspension supplement from a single wellbore.
(2)
If you begin drilling a certified unsuccessful well on one lease but the completion target is on a second lease, the entire royalty suspension supplement belongs to the second lease. However, if the target straddles a lease line, the lease where the surface of the well is located earns the royalty suspension supplement.
(e)
If the same wellbore that earns an RSS as a certified unsuccessful well later produces from a perforated interval the top of which is 15,000 feet TVD or deeper and becomes a qualified well, it will be subject to the following conditions:
(1)
Beginning on the date production starts, you must stop applying the royalty suspension supplement earned by that wellbore to your lease production.
(2)
If the completion of this qualified well is on your lease or, in the case of a directional well, is on another lease, then you must subtract from the royalty suspension volume earned by that qualified well the royalty suspension supplement amounts earned by that wellbore that have already been applied either on your lease or any other lease. The difference represents the royalty suspension volume earned by the qualified well.
(f)
If the same wellbore that earned a royalty suspension supplement later has a sidetrack drilled from that wellbore, you are not required to subtract any royalty suspension supplement earned by that wellbore from the royalty suspension volume that may be earned by the sidetrack.
(g)
You owe minimum royalties or rentals in accordance with your lease terms notwithstanding any royalty suspension supplements under this section.
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.

§203.46. To which production do I apply the royalty suspension supplements from drilling one or two certified unsuccessful wells on my lease?

30 C.F.R. § 203.46

(a)
Subject to the requirements of §§ 203.40, 203.43, 203.45, 203.47, and 203.48 you must apply an RSS in § 203.45 to the earliest oil and gas production:
(1)
Occurring on and after the day you file the information under § 203.47(b),
(2)
From, or allocated under a BSEE-approved unit agreement to, the lease on which the certified unsuccessful well was drilled, without regard to the drilling depth of the well producing the gas or oil.
(b)
If you have a royalty suspension volume for the lease under § 203.41, you must use the royalty suspension volumes for gas produced from qualified wells on the lease before using royalty suspension supplements for gas produced from qualified wells.
(c)
If you have no current production on which to apply the RSS allowed under § 203.45, your RSS applies to the earliest subsequent production of gas and oil from, or allocated under a BSEE-approved unit agreement to, your lease.
(d)
Unused royalty suspension supplements transfer to a successor lessee and expire with the lease.
(e)
You may not apply the RSS allowed under § 203.45 to production from any other lease, except for production allocated to your lease from a BSEE-approved unit agreement. If your certified unsuccessful well is on a lease subject to a BSEE-approved unit agreement, the lessees of other leases in the unit may not apply any portion of the RSS for your lease to production from the other leases in the unit.
(f)
You must begin or resume paying royalties when cumulative gas and oil production from, or allocated under a BSEE-approved unit agreement to, your lease (excluding any gas produced from qualified wells subject to a royalty suspension volume allowed under § 203.41) reaches the applicable royalty suspension supplement. For the month in which the cumulative production reaches this royalty suspension supplement, you owe royalties on the portion of gas or oil production that exceeds the amount of the royalty suspension supplement 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.

§203.47. What administrative steps do I take to obtain and use the royalty suspension supplement?

30 C.F.R. § 203.47

(a)
Before you start drilling a well on your lease targeted to a reservoir at least 18,000 feet TVD SS, you must notify, in writing, the BSEE Regional Supervisor for Production and Development of your intent to begin drilling operations and the depth of the target.
(b)
After drilling the well, you must provide the BSEE Regional Supervisor for Production and Development within 60 days after reaching the total depth in your well:
(1)
Information that allows BSEE to confirm that you drilled a certified unsuccessful well as defined under § 203.0, including:
(i)
Well log data, if your original well or sidetrack does not meet the producibility requirements of 30 CFR part 550, subpart A; or
(ii)
Well log, well test, seismic, and economic data, if your well does meet the producibility requirements of 30 CFR part 550, subpart A; and
(2)
Information that allows BSEE to confirm the size of the royalty suspension supplement for a sidetrack, including sidetrack measured depth and supporting documentation.
(c)
If you commenced drilling a well that otherwise meets the criteria for a certified unsuccessful well on a lease located entirely in more than 200 meters and entirely less than 400 meters of water on or after May 18, 2007, and finished it before December 18, 2008, you must provide the information in paragraph (b) of this section no later than February 17, 2009.
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.

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

30 C.F.R. § 203.48

(a)
You must pay royalties on all gas and oil production for which an RSV or an RSS otherwise would be allowed under §§ 203.40 through 203.47 for any calendar year when the average daily closing NYMEX natural gas price exceeds the applicable threshold price shown in the following table.
(b)
Determine the threshold price for any calendar year after 2007 by adjusting the threshold price in the previous year by the percentage that the implicit price deflator for the gross domestic product, as published by the Department of Commerce, changed during the calendar year.
(c)
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.
(d)
Production volumes on which you must pay royalty under this section count as part of your RSV and RSS.
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.