Lost language drains billions
Mysterious error to cost government energy royalties
By H. JOSEF HEBERT
Associated Press
WASHINGTON - How it happened or who's responsible is a mystery eight years after the fact.
But what may have been a simple error — or perhaps something more ominous — has given a multimillion-dollar windfall to a group of oil and natural gas companies and could cost the government billions of dollars more in the years to come.
The Interior Department disclosed this week that a provision was mysteriously deleted from hundreds of federal drilling leases in the late 1990s that would have required producers to pay royalties, once prices reached a certain level, on oil or gas taken from deep waters of the Gulf of Mexico.
In 1995, Congress exempted deep-water oil from royalty payments to spur development. But a price threshold was included in leases issued in 1996 and 1997 and again in leases sold in each year since 2000 that reinstates the royalties if market prices reach a certain level.
For some reason the language "was inadvertently dropped" from an addendum attached to more than 1,100 leases the Interior Department's Minerals Management Service issued for 1998 and 1999, Walter Cruickshank, the agency's deputy director, told a House Government Reform subcommittee Wednesday...cont'd
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