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May 07, 2010


Jerry Healy

I heard someone on the radio make a comment in passing last week that the oil that is collected from offshore drilling is sold on the open market. Doesn't this negate the argument of the "drill baby drill" crowd that the more we drill for oil off of our shores, the more independent we become from foriegn oil? How can it be possible that no one brings up this point on the Sunday talk shows?

It seems to me that the opponents of offshore drilling would be shouting this from the roof tops!


I'm surprised no one in MSM has yet to ask the Minerals Management Service what its position is on BP's royalty obligation for "spilled" oil. The OCS Lands Act requires the payment of royalties on production removed, saved or sold from a lease. In other words, a sale is not a prerequisite to the obligation to pay royalties. Even assuming ambiguous language in the statute or regulations, the federal government's royalty interest was damaged and there may be alternative means of recovery of the royalty loss.

The division of MMS that would be responsible for making the initial call on whether royalty collection will be pursed is Minerals Revenue Management or MRM. Its Associate Director is located in the DC Main Office. Most of its operations are conducted out of Lakewood, Colorado, however. This is the Division of all the scandals.

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