US drillers to get $1bn court award
A US federal appeals court ruled yesterday that 11 oil and gas companies should receive more than $1bn awarded to them in 2006 after the government effectively changed the terms of leases to drill off the California coast.
The US Court of Appeals was upholding a 2006 ruling that the government had breached the leases when changes in federal law materially interfered with the companies' efforts to develop the oil and gas reserves off California.
The case points to the difficulties US oil and gas companies have developing oil and gas resources in the US.
Even when acreage is legally open to production, restrictive regulations about how properties can be developed have made it impossible for companies to follow through.
The US government had estimated the area contained more than 1bn barrels of oil equivalent.
Politicians have been critical of the industry for pushing for Senator John McCain's proposal to open up protected areas off the coast of Florida, saying they have yet to develop all the property currently open to production.
The industry can point to this case as a good example of why not all leased properties in the US are under development.