Shell to pay $2.2M over underpayment of royalties

AP News
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Posted: May 10, 2011 4:38 PM
Shell to pay $2.2M over underpayment of royalties

The Justice Department says Shell Oil Co. and affiliates will pay the government $2.2 million to settle allegations that the companies underpaid royalties on natural gas from federal land. The action marks the latest agreement in a lawsuit against various oil and gas companies that has resulted in $233 million in payments by the defendants.

In an earlier part of the case, Shell paid $56 million to settle claims that it had underpaid royalties on natural gas in the Gulf of Mexico. Tuesday's settlement resolved claims on Shell's onshore leases. Regarding the $2.2 million, the government said Shell had underpaid royalties by improperly reporting processed gas as unprocessed gas and by deducting from royalty values the cost of boosting gas up to pipeline pressure.