TITLE 30 - MINERAL RESOURCES

CHAPTER II - MINERALS MANAGEMENT SERVICE, DEPARTMENT OF THE INTERIOR

SUBCHAPTER A - ROYALTY MANAGEMENT

PART 203 - RELIEF OR REDUCTION IN ROYALTY RATES

subpart b - OCS OIL, GAS, AND SULFUR GENERAL

203.68 - What pre - application costs will MMS consider in determining economic viability?

  (a) We will not consider ineligible costs as set forth in 203.89(h) in determining economic viability for purposes of royalty relief.

  (b) We will consider sunk costs according to the following table.

------------------------------------------------------------------------ We will When determining ------------------------------------------------------------------------ (1) Include sunk costs................. Whether a field that includes a pre-Act lease which has not produced, other than test production, before the application or redetermination submission date needs relief to become economic.

  (2) Not include sunk costs............. Whether an authorized field, a development project, or an expansion project can become economic with full relief (see 203.67).

  (3) Not include sunk costs............. How much suspension volume is necessary to make the field, a development project, or an expansion project economic (see 203.69(c)).

  (4) Include sunk costs for the project Whether a development project discovery well on each lease. or an expansion project needs relief to become economic.

------------------------------------------------------------------------ [63 FR 2618, Jan. 16, 1998, as amended at 67 FR 1876, Jan. 15, 2002]