Yayyy for the Bush-ites! Those poor, poor lil oil companies have advocates (Diamond Dick Cheney, for one) in the White House who are helping the near-bankrupt oil companies screw the U.S. taxpayer. Oh wait, I'm a taxpayer. And wait, why do oil companies need financial assistance from a near bankrupt U.S. Treasury?
The lawsuit could allow energy companies to avoid as much as $60 billion in royalties to the government over the next two decades.
Anadarko Petroleum, based in Houston, is suing the Interior Department to overturn regulations that force companies that drill in publicly owned waters to pay full royalties on oil and gas they produce during times of high energy prices.
Anadarko, which earned $4.8 billion in profit last year on sales of $10.2 billion, is arguing that Congress guaranteed oil companies a special incentive for drilling in deep water under which the companies could avoid paying the standard royalty on much of what they produced in the Gulf of Mexico. The Interior Department has adamantly argued that the incentives were never supposed to apply when oil prices climbed above about $34 a barrel.
The suit itself was filed a year ago by the Kerr-McGee Oil and Gas Corporation, which Anadarko acquired last year for $21 billion. But Anadarko put the suit on hold last year and began court-supervised mediation talks with the Interior Department.
On Thursday, a federal judge in Louisiana, Patricia Minaldi, declared that the mediation talks had failed and ordered both sides to start filing arguments in late May. The failure of the mediation poses a major problem for the Bush administration, which is already trying to prevent the loss of $10 billion in royalties as a result of a huge leasing error made during the Clinton administration.
If Anadarko is successful, the government would lose many more times that. The Government Accountability Office, the Congressional watchdog agency, estimated in January that the government would lose about $60 billion over 25 years.
The federal government leases millions of acres in the Gulf of Mexico to oil and gas producers. Companies are required to pay a royalty of 12 to 16 percent of their sales from the leases, but the government also offers royalty holidays as an incentive for deepwater drilling....
The revival of the lawsuit could cause political problems for the oil industry, increasing hostility among Democratic leaders already angry about high energy prices and record industry profits.
In January, House Democrats overwhelmingly passed a bill that would revoke $7.6 billion in tax breaks for oil companies and would impose a stiff additional fee on all companies that refused to renegotiate the flawed leases signed during the Clinton years.