On April 17, the Department of Interior's Minerals Management Service (MMS) hosts its big annual bash attended by as many as 700 (mostly) oil company executives where awards are given. It’s a fabulous opportunity for everyone to pat themselves on the back.
Why the government spends taxpayer time and money to throw a big schmooze party for big oil in Houston, TX is a question for all of us to ponder. For more than a year now, the Congress and the public have learned from a series of stories in the news media that all is not right at the MMS. Whistleblowers and the Congress have expressed concern that the agency is too cozy with the oil industry, particularly over the issue of whether the agency is collecting all the drilling fees owed to taxpayers and Native Americans. Tomorrow’s big schmooze-o-rama only feeds into these concerns.
One bad-boy company set to be honored is the infamous Anadarko. One of the largest holders of federal offshore leases in the Gulf of Mexico, Anadarko (then Kerr-McGee) filed suit against MMS in 2006, arguing that it should not have to pay any royalties on offshore leases issued under the Deep Water Royalty Relief Act of 1995. This is a brazen and aggressive legal strategy. If Anadarko wins, the federal government could lose up to $60 billion in royalties. In January 2007, a jury agreed with former MMS auditor Bobby Maxwell that Kerr McGee (now Anadarko) underpaid the government by $7.5 million.
“Corporate Leadership Awards” will also be bestowed upon five Chevron executives. Chevron is another holdout on the issue of paying royalties, specifically on 1998 to 1999 federal offshore leases for which MMS failed to include price thresholds, which require oil companies to pay when the price of oil reaches a certain level.
Two companies – Shell and ConocoPhillips -- have been repeat offenders in the arena of paying what they owe the government and Native Americans in drilling fees, known as royalties. Yet, they are being honored as “Mineral Revenues Stewardship Award Winners.” Go figure.
Shell Exploration and Production
Shell has paid far more in settlements with the Justice Department over royalty underpayments than any other oil company. Earlier this year, former Interior Department Secretary Gail Norton waltzed through the revolving door to set up shop working for Shell again.
2006 - Shell is the subject of two False Claims Act lawsuit filed by two MMS auditors who allege that the company inappropriately deducted $19 million in transportation costs from royalties paid the government.
2003 - Shell agrees to $49 million settlement over unauthorized flaring or venting of gas and failure to properly pay/report royalties.
2001 - Shell agrees to $110 million settlement for oil royalty underpayments in response to a False Claims Act lawsuit filed by whistleblowers and POGO.
2000 - Shell agrees to $56 million settlement in gas royalty underpayments.
ConocoPhillips
Similarly, ConocoPhillips is a repeat offender:
2005 - ConocoPhillips agrees to $21.7 million settlement with MMS over valuation of coalbed methane.
2004 - Burlington Resources (now ConocoPhillips) discloses in a Securities and Exchange Commission filing that underpaid an estimated $76 million (pdf) in gas royalties per pending False Claims Act litigation filed by Jack Grynberg.
2000 - ConocoPhillips agrees to $26 million settlement with Justice Department over oil royalty underpayments.
2000 - Burlington Resources (now ConocoPhillips) agrees to $8.5 million settlement with Justice Department over oil royalty underpayments.
-- Beth Daley
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