January 23, 2004: Subsidies Announced for Gas Drilling in Gulf of Mexico

Secretary of the Interior Gale Norton announces that the Interior’s Minerals Management Service (MMS) will provide an estimated $1 billion in subsidies to promote deep drilling for natural gas in the shallow waters of the Gulf of Mexico. Companies that drill wells deeper than 15,000 feet will be exempt from having to pay royalties on the first 15 billion cubic feet of gas produced. For wells deeper than 18,000 feet, royalties will be waived on the first 25 billion cubic feet. The royalty waiver will be discontinued if natural gas prices exceed $9.34 per thousand cubic feet. Without the subsidy, it would be too costly for companies to drill such wells. Norton claims that the program will save consumers money and create an estimated 26,000 new jobs. [Associated Press, 1/23/2003; Petroleum News, 2/1/2004]