§ 203.2 How can I obtain royalty relief?

We may reduce or suspend royalties for Outer Continental Shelf (OCS) leases or projects that meet the criteria in the following table.

If you have a lease . . .

And if you . . .

Then we may grant you . . .

(a) With earnings that cannot sustain production (i.e., End-of-life lease),

Would abandon otherwise potentially recoverable resources but seek to increase production by operating beyond the point at which the lease is economic under the existing royalty rate,

A reduced royalty rate on current monthly production and a higher royalty rate on additional monthly production (see §§ 203.50 through 203.56).

(b) Located in a designated GOA deep water area (i.e., 200 meters or greater) and acquired in a lease sale held before November 28, 1995, or after November 28, 2000,

Propose an expansion project and can demonstrate your project is uneconomic without royalty relief,

A royalty suspension for a minimum production volume plus any additional production large enough to make the project economic (see §§ 203.60 through 203.79).

(c) Located in a designated GOA deep water area and acquired in a lease sale held before November 28, 1995 (Pre-Act lease),

Are on a field from which no current pre-Act lease produced (other than test production) before November 28, 1995, (Authorized field,)

A royalty suspension for a minimum production volume plus any additional volume needed to make the field economic (see §§ 203.60 through 203.79).

(d) Located in a designated GOA deep water area and acquired in a lease sale held after November 28, 2000,

Propose a development project and can demonstrate that the suspension volume, if any, for your lease is not enough to make development economic,

A royalty suspension for a minimum production volume plus any additional volume needed to make your project economic (see §§ 203.60 through 203.79).

(e) Where royalty relief would recover significant additional resources or, offshore Alaska or in certain areas of the GOA, would enable development,

Are not eligible to apply for end-of-life or deep water royalty relief, but show us you meet certain eligibility conditions,

A royalty modification in size, duration, or form that makes your lease or project economic (see § 203.80).

(f) Located in a designated GOA shallow water area and acquired in a lease sale held before January 1, 2001, or after January 1, 2004, or have exercised an option to substitute for royalty relief in your lease terms,

Drill a deep well on a lease that is not eligible for deep water royalty relief and you have not previously produced oil or gas from a deep well or an ultra-deep well,

A royalty suspension for a volume of gas produced from successful deep and ultra-deep wells, or, for certain unsuccessful deep and ultra-deep wells, a smaller royalty suspension for a volume of gas or oil produced by all wells on your lease (see §§ 203.40 through 203.49).

(g) Located in a designated GOA shallow water area,

Drill and produce gas from an ultra-deep well on a lease that is not eligible for deep water royalty relief and you have not previously produced oil or gas from an ultra-deep well,

A royalty suspension for a volume of gas produced from successful ultra-deep and deep wells on your lease (see §§ 203.30 through 203.36).

(h) Located in planning areas offshore Alaska,

Propose an expansion project or propose a development project and can demonstrate that the project is uneconomic without relief or that the suspension volume, if any, for your lease is not enough to make development economic,

A royalty suspension for a minimum production volume plus any additional volume needed to make your project economic (see §§ 203.60, 203.62, 203.67 through 203.70, 203.73, and 203.76 through 203.79).

[76 FR 64462, Oct. 18, 2011, as amended at 90 FR 44324, Sept. 15, 2025]