5 oil and gas companies to pay royalties

WASHINGTON – Five oil and gas companies, including Shell, ConocoPhillips and BP, have agreed to pay royalties on future production under flawed drilling leases in the Gulf of Mexico, the government said Thursday.

The companies are among 59 energy producers that hold the leases at issue from 1998 and 1999. Because of a government mistake, the leaseholders have avoided royalty payments on oil and gas taken from federal waters. The leases omitted language requiring royalties when prices reached a certain level.

The agreements with the five companies are “a step in the right direction” and may lead others to find a way to rework the flawed leases, said the Interior Department’s assistant secretary, Stephen Allred.

Some members of Congress have estimated that the royalty exemptions have cost the government $2 billion. Allred put the amount at “somewhat less than $900 million.”

AP