An Old Lease on Life

U.S. Interior Department negotiating to recoup lost royalties

Not yet recovered from its embarrassment at a contractual omission that lost the U.S. a hell of a lot of money, the Interior Department is negotiating with 22 oil and gas companies to try and recoup the dough. When the feds issued deep-water drilling leases for the Gulf of Mexico in 1998 and 1999, they neglected to stipulate that drillers would have to pay federal royalties if the market price for oil and gas rose above a certain level. Prices have, of course, shot up, and meeellions of dollars have stayed in the pockets of more than 40 oil and gas companies instead of going to U.S. coffers. The companies have been loath to rectify the mistake, arguing that the leases, while flawed, were still valid; about half of the corporations have declined to even discuss the matter. However, a bill that would bar companies from bidding on new gulf leases until they renegotiate and pony up the cash has passed the House and is awaiting action in the Senate. See, justice always wins out in the end! Right?