NEW YORK — Exxon Mobil Corp. and the federal government are fighting over one of the largest oil discoveries in the Gulf of Mexico that could yield billions of dollars of crude in coming years, according to a report in The Wall Street Journal.
The Julia oil field, about 250 miles southwest of New Orleans, may hold more than 700 million barrels of oil and gas equivalent. Exxon, which announced the discovery in June, wants to tap that field. But the Interior Department says Exxon's leases have expired and the company hasn't met requirements for an extension.
Exxon and part-owner Statoil have filed separate lawsuits in a Louisiana federal court to preserve the leases.
Exxon spokesman Patrick McGinn told the Journal that the government traditionally grants extensions as a matter of course. "You state your case and you got it." The government's refusal "was unexpected."
Tens of billions of dollars are at stake. The oil could revert back to the federal government if Exxon and Statoil don't win in court. And if the Interior Department takes back those leases, it would delay the development of those fields and the tax royalties that come with them.
At current prices, potential royalties paid to the government over the lifetime of a one billion-barrel field would be about $10.95 billion, the Journal said.
The dispute over the Julia field began in October 2008 when Exxon applied to extend its lease. By February 2009, the government denied Exxon's request, saying that the company didn't present a specific plan to producing the oil.
Exxon appealed numerous times, losing its final appeal in May.
An Interior Department spokeswoman said, "Our priority remains the safe development of the nation's offshore energy resources, which is why we continue to approve extensions that meet regulatory standards."
Exxon shares lost $2.02, or 2.7 percent, at $72.13 in early trading as oil and stock markets sunk following reports of more economic weakness around the globe.
Comments (6)
Add commentExxon could
just agree to pay federal income taxes they've avoided on billions in profits. If the government can delay collection all this time, a little more delay won't hurt. Maybe someone will get the lease that actually pays federal income tax. Win-win.
Exxon Fights Against Admitting Fault?
Oh come on. Americans should boycott Exxon fully, including all the gas stations that sell their products, and also stop buying Exxon stock!
Consumer-Power is upon us, and wields the strongest mallet!
Smart people
You guys are on the right path. The way for the government to get the most money is to not renew the lease and let the government tap the oil. Whenever businesses start making a lot of money, the government should take the money away to be fair to everyone. Why should I have to suffer when some people have more money than they need? I thought we were all created equal! Exxon should give their profits to the government and poor people like me!
Joe
I'm okay with multinationals
who avoid paying taxes, out source jobs, and expand operations in other countries while making record profits, pay taxes like most of US (the middle class anyway). And I agree with Buffet that the uber wealthy can pay at least the same percentage of taxes that most of US in the middle pay.
Must be nice to make a billion dollars and just pay SS taxes on the first 106 thousand. I pay SS on everything I make.
Funny thing though, more and more of the uber wealthy, just plain wealthy, and corporate CEOs are pointing out that they're not paying what they should and the major corporations are doing what they should to help provide job opportunities in the US instead of overseas.
Maybe reality is catching on with those who benefit the most from the system. Maybe they're coming to realize the part they have to do with US being where we are, and are starting to think that they should do as much good as they have harm.
Nawww. Just a pipe dream.
Of the top ten oil companies in the world,
Exxon is not one of them.
So I hear, they are all ten government-owned.
While
we're robbing Exxon, is it okay to even out the number of boats in a neighborhood?
I know a guy with a lot more retirement money than I have. Can we even that out too?
If one guy evens out the money by using a gun in a bank it's called robbery, but when the do-gooders and the communists unite to take property away from others through government, it's called social justice?
Social justice = peace through hate. World peace through class hate. Karl Marx