Offshore staff
HOUSTON -- Bob Tippee, editor of Oil & Gas Journal, said at the DOT conference in Houston Wednesday that much of what is driving investment in the deepwater of the Gulf of Mexico is the Deep Water Royalty Relief Act passed in 1995.
The act, Tippee explained, granted royalty relief for projects in deepwater.
Tippee pointed to the number of leases in the deepwater GoM and the enormous amount of production coming from the area as proof of the act's effectiveness. "The success of the DWRRA is unquestionable," he said. "Clearly, the DWRRA has borne fruit."
The current controversy with the DWRRA is about whether royalty relief should be tied to oil prices, Tippee said. He also pointed out what appears to be an oversight in how the act was applied, an oversight that resulted in a lot of potential revenue being unclaimed.
With the change in the US government that leaves Democrats in power, the issue of revenues could become critical at a time when the act is generating revenue. "The production payoff is just beginning," Tippee said. "My biggest concern is that controversy over DWRRA price thresholds might jeopardize a sound concept."
Tippee said only time will tell what stand the US government will take on the issue, voicing his hope that the act will continue to encourage investment so investment in deepwater will grow.
"The DWRRA revived the Gulf of Mexico," he said.
11/29/2006
