BP will pay US $20.5M to settle royalty case

New York, New York (AP) October 2011

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.

A representative from BP did not immediately respond to a request for comment.

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. About $270 million has been collected from energy companies, including Exxon Mobil Corp., Royal Dutch Shell plc, Chevron Corp., Anadarko Petroleum Corp. and Marathon Oil Corp., because of his lawsuit. Miller said there is still one case pending.

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

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 are Amoco Corp., Amoco Production Co., BP Exploration & Oil Inc., BP America Inc., Atlantic Richfield Co. and Vastar.