---
kind: "range"
citation: "30 C.F.R. §§ 203.60–203.79"
title: "30"
from: "203.60"
to: "203.79"
count: 20
url: "https://uscodex.org/cfr/30/203.60..203.79"
---

# §203.60. Who may apply for royalty relief on a case-by-case basis in deep water in the Gulf of America or offshore of Alaska?


You may apply for royalty relief under §§ [203.61(b)](/cfr/30/203.61.md?p=b) and [203.62](/cfr/30/203.62.md) for an individual lease, unit or project if you:

- (a) Hold a pre-Act lease (as defined in [§ 203.0](/cfr/30/203.0.md)) that we have assigned to an authorized field (as defined in [§ 203.0](/cfr/30/203.0.md));
- (b) Propose an expansion project (as defined in [§ 203.0](/cfr/30/203.0.md)); or
- (c) Propose a development project (as defined in [§ 203.0](/cfr/30/203.0.md)).

# §203.61. How do I assess my chances for getting relief?


You may ask for a nonbinding assessment (a formal opinion on whether a field would qualify for royalty relief) before turning in your first complete application on an authorized field. This field must have a qualifying well under [30 CFR part 550](/cfr/30/part550.md), [subpart A](/cfr/30/subpartA.md), or be on a lease that has allocated production under an approved unit agreement.

- (a) **To request a nonbinding assessment, you must—**
  - (1) Submit a draft application in the format and detail specified in guidance from the BSEE regional office for the GOA;
  - (2) Propose to drill at least one more appraisal well if you get a favorable assessment; and
  - (3) Pay a fee under [§ 203.3](/cfr/30/203.3.md).
- (b) You must wait at least 90 days after receiving our assessment to apply for relief under [§ 203.62](/cfr/30/203.62.md).
- (c) This assessment is not binding because a complete application may contain more accurate information that does not support our original assessment. It will help you decide whether your proposed inputs for evaluating economic viability and your supporting data and assumptions are adequate.

# §203.62. How do I apply for relief?

- (a) You must send a complete application and the required fee to the BSEE Regional Director for your region.
- (b) Your application for royalty relief offshore Alaska or in deep water in the GOA must include an original and two copies (one set of digital information) of:
  - (1) Administrative information report;
  - (2) Economic viability and relief justification report;
  - (3) G&G report;
  - (4) Engineering report;
  - (5) Production report; and
  - (6) **Cost report.**
- (c) [Section 203.82](/cfr/30/203.82.md) explains why we are authorized to require these reports.
- (d) Sections [203.81](/cfr/30/203.81.md), [203.83](/cfr/30/203.83.md), and [203.85 through 203.89](/cfr/30/203.85..203.89.md) describe what these reports must include. The BSEE regional office for your region will guide you on the format for the required reports, and we encourage you to contact this office before preparing your application for this guidance.

# §203.63. Does my application have to include all leases in the field?

- (a) For authorized fields, we will accept only one joint application for all leases that are part of the designated field on the date of application, except as provided in [paragraph (a)(3)](#a-3) of this section and [§ 203.64](/cfr/30/203.64.md). However, we will evaluate all acreage that may eventually become part of the authorized field. Therefore, if you have any other leases that you believe may eventually be part of the authorized field, you must submit data for these leases according to [§ 203.81](/cfr/30/203.81.md).
  - (1) The Regional Director maintains a Field Names Master List with updates of all leases in each designated field.
  - (2) To avoid sharing proprietary data with other lessees on the field, you may submit your proprietary G&G report separately from the rest of your application. Your application is not complete until we receive all the required information for each lease on the field. We will not disclose proprietary data when explaining our assumptions and reasons for our determinations under [§ 203.67](/cfr/30/203.67.md).
  - (3) We will not require a joint application if you show good cause and honest effort to get all lessees in the field to participate. If you must exclude a lease from your application because its lessee will not participate, that lease is ineligible for the royalty relief for the designated field.
- (b) If your application seeks only relief for a development project or an expansion project, your application does not have to include all leases in the field.

# §203.64. How many applications may I file on a field or a development project?


You may file one complete application for royalty relief during the life of the field or for a development project or an expansion project designed to produce a reservoir or set of reservoirs. However, you may send another application if:

- (a) You are eligible to apply for a redetermination under [§ 203.74](/cfr/30/203.74.md);
- (b) You apply for royalty relief for an expansion project;
- (c) You withdraw the application before we make a determination; or
- (d) **You apply for end-of-life royalty relief.**

# §203.65. How long will BSEE take to evaluate my application?

- (a) We will determine within 20 working days if your application for royalty relief is complete. If your application is incomplete, we will explain in writing what it needs. If you withdraw a complete application, you may reapply.
- (b) We will evaluate your first application on a field within 180 days, evaluate your first application on a development project or an expansion project within 150 days and evaluate a redetermination under [§ 203.75](/cfr/30/203.75.md) within 120 days after we determine that it is complete.
- (c) We may ask to extend the review period for your application under the conditions in the following table.
- (d) We may change your assumptions under [§ 203.62](/cfr/30/203.62.md) if our technical evaluation reveals others that are more appropriate. We may consult with you before a final decision and will explain any changes.
- (e) We will notify all designated lease operators within a field when royalty relief is granted.

# §203.66. What happens if BSEE does not act in the time allowed?


If we do not act within the timeframes established under [§ 203.65](/cfr/30/203.65.md), you get royalty relief according to the following table.


# §203.67. What economic criteria must I meet to get royalty relief on an authorized field or project?


We will not approve applications if we determine that royalty relief cannot make the field, development project, or expansion project economically viable. Your field or project must be uneconomic while you are paying royalties and must become economic with royalty relief.


# §203.68. What pre-application costs will BSEE consider in determining economic viability?

- (a) We will not consider ineligible costs as set forth in [§ 203.89(h)](/cfr/30/203.89.md?p=h) in determining economic viability for purposes of royalty relief.
- (b) We will consider sunk costs according to the following table.

# §203.69. If my application is approved, what royalty relief will I receive?


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 [§§ 203.40 through 203.49](/cfr/30/203.40..203.49.md) or ultra-deep gas royalty relief under [§§ 203.30 through 203.36](/cfr/30/203.30..203.36.md), 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)](#c) nor (d) of this section apply, the minimum royalty suspension volumes are as shown in the following table:
- (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 America 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 [§ 203.66](/cfr/30/203.66.md). 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.

# §203.70. What information must I provide after BSEE approves relief?


You must submit reports to us as indicated in the following table. Sections [203.81](/cfr/30/203.81.md), [203.90](/cfr/30/203.90.md), and [203.91](/cfr/30/203.91.md) describe what these reports must include. The BSEE Regional Office for your region will prescribe the formats.


# §203.71. How does BSEE allocate a field's suspension volume between my lease and other leases on my field?


The allocation depends on when production occurs, when we issued the lease, when we assigned it to the field, and whether we award the volume suspension by an approved application or establish it in the lease terms, as prescribed in this section.

- (a) If your authorized field has an approved royalty suspension volume under §§ [203.67](/cfr/30/203.67.md) and [203.69](/cfr/30/203.69.md), we will suspend payment of royalties on production from all leases in the field that participate in the application until their cumulative production equals the approved volume. The following conditions also apply:
- (b) When a project has more than one lease, the royalty suspension volume for each lease equals that lease's actual production from the project (or production allocated under an approved unit agreement) until total production for all leases in the project equals the project's approved royalty suspension volume.
- (c) You may receive a royalty-suspension volume only if your entire lease is west of 87 degrees, 30 minutes West longitude. If the field lies on both sides of this meridian, only leases located entirely west of the meridian will receive a royalty-suspension volume.

# §203.72. Can my lease receive more than one suspension volume?


Yes. You may apply for royalty relief that involves more than one suspension volume under [§ 203.62](/cfr/30/203.62.md) in two circumstances.

- (a) Each field that includes your lease may receive a separate royalty-suspension volume, if it meets the evaluation criteria of [§ 203.67](/cfr/30/203.67.md).
- (b) An expansion project on your lease may receive a separate royalty-suspension volume, even if we have already granted a royalty-suspension volume to the field that encompasses the project. But the reserves associated with the project must not have been part of our original determination, and the project must meet the evaluation criteria of [§ 203.67](/cfr/30/203.67.md).

# §203.73. How do suspension volumes apply to natural gas?


You must measure natural gas production under the royalty-suspension volume as follows: 5.62 thousand cubic feet of natural gas, measured in accordance with [30 CFR part 250](/cfr/30/part250.md), [subpart L](/cfr/30/subpartL.md), equals one barrel of oil equivalent.


# §203.74. When will BSEE reconsider its determination?


You may request a redetermination after we withdraw approval or after you renounce royalty relief, unless we withdraw approval due to your providing false or intentionally inaccurate information. Under certain conditions you may also request a redetermination if we deny your application or if you want your approved royalty suspension volume to change. In these instances, to be eligible for a redetermination, at least one of the following four conditions must occur.

- (a) You have significant new G&G data and you previously have not either requested a redetermination or reapplied for relief after we withdrew approval or you relinquished royalty relief. “Significant” means that the new G&G data:
  - (1) Results from drilling new wells or getting new three-dimensional seismic data and information (but not reinterpreting old data);
  - (2) Did not exist at the time of the earlier application; and
  - (3) Changes your estimates of gross resource size, quality, or projected flow rates enough to materially affect the results of our earlier determination.
- (b) You demonstrate in your new application that the technology that most efficiently develops this field or lease was not considered or deemed feasible in the original application. Your newly proposed technology must improve the profitability, under equivalent market conditions, of the field or lease relative to the development system proposed in the prior application.
- (c) Your current reference price decreases by more than 25 percent from your base reference price as calculated under this paragraph.
  - (1) Your current reference price is a weighted-average of daily closing prices on the NYMEX for light sweet crude oil and natural gas over the most recent full 12 calendar months;
  - (2) Your base reference price is a weighted average of daily closing prices on the NYMEX for light sweet crude oil and natural gas for the full 12 calendar months preceding the date of your most recently approved application for this royalty relief; and
  - (3) The weighting factors are the proportions of the total production volume (in BOE) for oil and gas associated with the most likely scenario (identified in §§ [203.85](/cfr/30/203.85.md) and [203.88](/cfr/30/203.88.md)) from your most recently approved application for this royalty relief.
- (d) Before starting to build your development and production system, you have revised your estimated development costs, and they are more than 120 percent of the eligible development costs associated with the most likely scenario from your most recently approved application for this royalty relief.

# §203.75. What risk do I run if I request a redetermination?


If you request a redetermination after we have granted you a suspension volume, you could lose some or all of the previously granted relief. This can happen because you must file a new complete application and pay the required fee, as discussed in [§ 203.62](/cfr/30/203.62.md). We will evaluate your application under [§ 203.67](/cfr/30/203.67.md) using the conditions prevailing at the time of your redetermination request. In our evaluation, we may find that you should receive a larger, equivalent, smaller, or no suspension volume. This means we could find that you do not qualify for the amount of relief previously granted or for any relief at all.


# §203.76. When might BSEE withdraw or reduce the approved size of my relief?


We will withdraw approval of relief for any of the following reasons.

- (a) You change the type of development system proposed in your application (e.g., change from a fixed platform to floating production system, or from an independent development and production system to one with subsea wells tied back to a host production facility, etc.).
- (b) You do not start building the proposed development and production system within 18 months of the date we approved your application, unless the BSEE Director grants you an extension under [§ 203.79(c)](/cfr/30/203.79.md?p=c). If you start building the proposed system and then suspend its construction before completion, and you do not restart continuous building of the proposed system within 18 months of our approval, we will withdraw the relief we granted.
- (c) Your actual development costs are less than 80 percent of the eligible development costs estimated in your application's most likely scenario, and you do not report that fact in your post-production development report ([§ 203.70](/cfr/30/203.70.md)). Development costs are those expenditures defined in [§ 203.89(b)](/cfr/30/203.89.md?p=b) incurred between the application submission date and start of production. If you report this fact in the post-production development report, you may retain the lesser of 50 percent of the original royalty suspension volume or 50 percent of the median of the distribution of the potentially recoverable resources anticipated in your application.
- (d) We granted you a royalty-suspension volume after you qualified for a redetermination under [§ 203.74(c)](/cfr/30/203.74.md?p=c), and we find out your actual development costs are less than 90 percent of the eligible development costs associated with your application's most likely scenario. Development costs are those expenditures defined in [§ 203.89(b)](/cfr/30/203.89.md?p=b) incurred between your application submission date and start of production.
- (e) You do not send us the fabrication confirmation report or the post-production development report, or you provide false or intentionally inaccurate information that was material to our granting royalty relief under this section. You must pay royalties and late-payment interest determined under 30 U.S.C. [1721](/usc/30/1721.md) and [30](/usc/30/30.md) CFR 1218.54 on all volumes for which you used the royalty suspension. You also may be subject to penalties under other provisions of law.

# §203.77. May I voluntarily give up relief if conditions change?


Yes, you may voluntarily give up relief by sending a letter to that effect to the BSEE Regional office for your region.


# §203.78. Do I keep relief approved by BSEE under this part for my lease, unit or project if prices rise significantly?


If prices rise above a base price threshold for light sweet crude oil or natural gas, you must pay full royalties on production otherwise subject to royalty relief approved by BSEE under [§§ 203.60-203.77](/cfr/30/203.60-203.77.md) for your lease, unit or project as prescribed in this section.

- (a) The following table shows the base price threshold for various types of leases, subject to [paragraph (b)](#b) of this section. Note that, for post-November 2000 deepwater leases in the GOA price thresholds apply on a lease basis, so different leases on the same development project or expansion project approved for royalty relief may have different price thresholds.
- (b) An exception may occur if we determine that the price thresholds in paragraphs (a)(2) or (a)(3) of this section mean the royalty suspension volume set under [§ 203.69](/cfr/30/203.69.md) and in lease terms would provide inadequate encouragement to increase production or development, in which circumstance we could specify a different set of price thresholds on a case-by-case basis.
- (c) Suppose your base oil price threshold set under [paragraph (a)](#a) is $28.00 per barrel, and the daily closing NYMEX light sweet crude oil prices for the previous calendar year exceeds $28.00 per barrel, as adjusted in [paragraph (h)](#h) of this section. In this case, we retract the royalty relief authorized in this subpart and you must:
  - (1) Pay royalties on all oil production for the previous year at the lease stipulated royalty rate plus interest (under 30 U.S.C. [1721](/usc/30/1721.md) and [30](/usc/30/30.md) CFR 1218.54) by March 31 of the current calendar year, and
  - (2) **Pay royalties on all your oil production in the current year.**
- (d) Suppose your base gas price threshold set under [paragraph (a)](#a) is $3.50 per million British thermal units (Btu), and the daily closing NYMEX light sweet crude oil prices for the previous calendar year exceeds $3.50 per million Btu, as adjusted in [paragraph (h)](#h) of this section. In this case, we retract the royalty relief authorized in this subpart and you must:
  - (1) Pay royalties on all gas production for the previous year at the lease stipulated royalty rate plus interest (under 30 U.S.C. [1721](/usc/30/1721.md) and [30](/usc/30/30.md) CFR 1218.54) by March 31 of the current calendar year, and
  - (2) **Pay royalties on all your gas production in the current year.**
- (e) Production under both paragraphs [(c)](#c) and [(d)](#d) of this section counts as part of the royalty-suspension volume.
- (f) You are entitled to a refund or credit, with interest, of royalties paid on any production (that counts as part of the royalty-suspension volume):
  - (1) Of oil if the arithmetic average of the closing prices for the current calendar year is $28.00 per barrel or less, as adjusted in [paragraph (h)](#h) of this section, and
  - (2) Of gas if the arithmetic average of the closing natural gas prices for the current calendar year is $3.50 per million Btu or less, as adjusted in [paragraph (h)](#h) of this section.
- (g) You must follow our regulations in the Office of Natural Resources Revenue, [30 CFR chapter XII](/cfr/30/chXII.md), for receiving refunds or credits.
- (h) **We change the prices referred to in paragraphs (c), (d), and (f) of this section periodically.** For pre-Act leases, these prices change during each calendar year after 1994 by the percentage that the implicit price deflator for the gross domestic product changed during the preceding calendar year. For post-November 2000 deepwater leases, these prices change as indicated in the lease instrument or in the Notice of Sale under which we issued the lease.

# §203.79. How do I appeal BSEE's decisions related to royalty relief for a deepwater lease or a development or expansion project?

- (a) Once we have designated your lease as part of a field and notified you and other affected operators of the designation, you can request reconsideration by sending the BSEE Director a letter within 15 days that also states your reasons. The BSEE Director's response is the final agency action.
- (b) Our decisions on your application for relief from paying royalty under [§ 203.67](/cfr/30/203.67.md) and the royalty-suspension volumes under [§ 203.69](/cfr/30/203.69.md) are final agency actions.
- (c) If you cannot start construction by the deadline in [§ 203.76(b)](/cfr/30/203.76.md?p=b) for reasons beyond your control (e.g., strike at the fabrication yard), you may request an extension up to 1 year by writing the BSEE Director and stating your reasons. The BSEE Director's response is the final agency action.
- (d) We will notify you of all final agency actions by certified mail, return receipt requested. Final agency actions are not subject to appeal to the Interior Board of Land Appeals under 30 CFR part [290](/cfr/30/part290.md) and [43](/cfr/30/part43.md) CFR [part 4](/cfr/30/part4.md). They are judicially reviewable under section 10(a) of the Administrative Procedure Act ([5 U.S.C. 702](/usc/5/702.md)) only if you file an action within 30 days of the date you receive our decision.