BP will pay US $20.5M to settle royalty case

AP News
Posted: Sep 16, 2011 5:26 PM
BP will pay US $20.5M to settle royalty case

British oil giant BP will pay the U.S. $20.5 million to resolve claims that its subsidiaries underpaid royalties owed to the federal government and Native Americans, the Justice Department said Friday.

The settlement arises from a whistleblower lawsuit filed by Harrold Wright, who was chairman of the National Gas Supply Association, said Justice Department spokesman Charles Miller. The suit has resulted in a total of about $270 million being collected from energy companies including Exxon Mobil Corp., Royal Dutch Shell plc, Chevron Corp., Anadarko Petroleum Corp. and Marathon Oil Corp.

Another case Wright filed is still pending. The suits were filed in 1996 and 1998.

Wright is now dead, so his heirs will receive the $5.3 million he was due from the BP settlement, the Justice Department said.

BP denied any wrongdoing in an emailed statement. The company said in the statement that it "is pleased that the parties were able to work cooperatively to resolve this long-standing and complex dispute involving the method for determining natural gas royalties."

Energy companies are required to pay royalties on the value of gas produced on land leased from the federal government and Native American tribes. Companies must report how much they owe each month.

The lawsuit claimed that the companies improperly deducted certain costs from royalty values, reported processed gas as unprocessed gas to reduce payments and didn't follow correct accounting procedures on certain leases, said the Justice Department.

The BP divisions that must pay the settlement reached Friday are Amoco Corp., Amoco Production Co., BP Exploration & Oil Inc., BP America Inc., Atlantic Richfield Co. and Vastar.

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