Exxon settles lawsuit against US govt on Mexico Gulf oil leases

Exxon settles lawsuit against US govt on Mexico Gulf oil leases

Exxon Mobil Corp., the largest publicly traded oil company, settled its lawsuit against US Interior Secretary Kenneth Salazar over the government’s decision to cancel offshore leases that may yield “billions of barrels of oil.”

The accord “will allow ExxonMobil to develop this very large, but technically challenging, resource as quickly as possible using a phased approach,” Patrick McGinn, a spokesman for Irving, Texas-based Exxon, said Friday.

Exxon sued Aug 12 over a ruling by the department that canceled Gulf of Mexico leases for the so-called Julia Unit.

Exxon argued that the department deprived the company of its rights under the canceled leases and took away Exxon’s ability to produce a reservoir believed to hold billions of barrels of oil.

Exxon said in its complaint that it sought a suspension for its Julia leases in 2008 because of drilling complexity. It cited federal regulations that allow oil producers to suspend production in their fields, partly “to facilitate proper development of a lease.”

Following several appeals, the Interior Department concluded in a decision last May that Exxon lacked a “commitment” to producing oil at the time the leases expired.

As part of the settlement, the Interior Department granted a suspension of production for the leases from Dec 13, 2008, to Oct 31, 2013.

The department will grant a second suspension until Aug. 31, 2014, if Exxon and Statoil ASA, a partner in Exxon’s Julia fields, remains in compliance with the terms of the agreement and takes certain steps toward production, according to court documents.

Exxon and Statoil agreed to pay a yearly fee on the original leases of $650 per acre until 87.5 million barrels of oil are produced from the fields. The first fee will be owed for 2011, according to court documents. The minimum royalty rate for the leases was increased to $11 per acre and the yearly rental rate increased to $16 an acre.

Melissa Schwartz, a spokeswoman for the Interior Department, said that the proposed settlement affirms the regulatory process, “provides incentives for timely and thorough development of the leases, and secures a fair return on those resources to the US Treasury.”

Updated : 2021-03-06 22:29 GMT+08:00