OMR FAQs | Department of Energy and Natural Resources

OFFICE OF MINERAL RESOURCES FREQUENTLY ASKED QUESTIONS

Minerals

Does the Office of Mineral Resources have authority over mineral leases on private lands?

The Office of Mineral Resources (OMR) only has responsibility for the mineral leases on state-owned lands and water bottoms. Unfortunately, the office is unable to answer questions regarding leases involving an individual from a lease on privately held lands. OMR recommends that individuals with such concerns retain private counsel to handle matters on such leases.

How are tracts for State or State Agency Mineral Leases nominated?

Prospective lessees first submit a completed Prospective Leaseholder registration form, then check the State Mineral and Energy Board schedule to select the date of the sale they wish to nominate the tract for, check for any special categories the lease might fall under, then submit a nomination packet that includes an application letter, written property description and plat map, a $400 nomination and various other title and category documents as necessary.

Are there special conditions for nominating state acreage in the Atchafalaya Basin?

Any party seeking to nominate state acreage or acreage belonging to the Department of Wildlife and Fisheries within the boundaries of the Atchafalaya Basin area shall not nominate tracts that include acreage both within and outside of the Atchafalaya Basin but shall limit nominations to tracts either wholly within or wholly outside of the Atchafalaya Basin area.

How are tracts of land for state or state agency mineral leases bid on?

Bidders must register as prospective leaseholders with the Office of Mineral Resources, check the State Mineral and Energy Board schedule to determine submission deadlines for the tracts they are interested in and prepare a bid packet that includes the bid form, written property description and plat map of the acreage they are interested in, a 10 percent leasing fee and a $30-per-acre payment.

How are interests in State Mineral Leases assigned to other operators?

Assignees must register as prospective leaseholders with the Office of Mineral Resources, then Assignment or other Transfer of Interest documents must be signed by the Assignor(s) and Assignee(s), witnessed by two (2) witnesses per signature with printed names underneath, notarized, and received in the Office of Mineral Resources by the date of the Lease Sale for the month prior to the month on which it will appear on the Docket for approval by the State Mineral and Energy Board.

How is acreage from a State Mineral Lease released?

Lessees prepare a release packet containing the following: For full release - a certified copy of the release instrument containing the number(s) of the lease(s) being released. The instrument must be signed by all working interest owners, witnessed, notarized and recorded. For partial release - submit a release document as described above. Additionally, the packet must contain accompanying exhibits and additional information detailing the acreage portion released

How are leases for land controlled by specific state agencies submitted for State Mineral and Energy Board approval?

Each State Agency seeking to lease its mineral rights must follow all of the procedures set forth in LA R.S. 30:126 and 30:127 as would be required for the state to grant a mineral lease on its land and water bottoms, prepare its lease packet and submit it by no later than the State Mineral Lease Sale one month prior to the desired actual lease sale date.

How does an applicant register with the Office of Mineral Resources?

All applicants and prospective and current leaseholders of state mineral leases shall register certain information and proof of authorization to do business in the state of Louisiana with the Office of Mineral Resources (OMR) and, thereafter, renew their registration by January 31st of each year [LA R.S. 30:123.1(B)]. Transfers or assignments of state mineral leases shall not be granted to prospective leaseholders who are not currently registered with the OMR [La. R.S. 30:128(A)].

How do I find out if I am registered as a prospective leaseholder?

Click here to find out if you are registered as a prospective leaseholder.

How do I get copies of State Mineral Lease file documents?

Complete a Request for Copies Form and submit it to the Office of Mineral Resources as follows:

Physical Address
617 N. 3rd Street, 8th Floor
Baton Rouge, LA 70802

Mailing Address
Post Office Box 2827
Baton Rouge, LA
70821-2827

How do I obtain the latest release list?

Click here for the latest release list.

How do I report force majeure?

Read your lease -- some older lease forms may not have Force Majeure language or may not have language applicable to your particular situation. Some older leases require action within sixty (60) days instead of ninety (90) days. A copy of the state lease form can be found on our website in the public SONRIS connection.

Within ninety (90) [or sixty (60)] days of the event, report the incident to the Office of Mineral Resources (OMR) using the ONLINE FORCE MAJEURE reporting system.

This should be followed by written notice that includes a description of how the lease(s) was maintained at the time of the event. a list of all leases affected by the event, the nature and duration of the event, the resulting effect which prevents the commencement or continuation of lease operations or production, the estimated time necessary to clear up the effects, a brief economic fiscal statement stating the affect the force majeure condition has on the state.

If a major catastrophic event occurs, such as a hurricane, please complete the Force Majeure Spreadsheet with the basic information identifying all wells and units that were producing at the time of the event. Otherwise, complete the ONLINE FORCE MAJEURE reporting system and follow the steps mentioned. This action is requested to further assist the staff to ensure all leases that fall under the force majeure event are identified.

Within a reasonable time of the initial notification, the lessee or operator shall send to OMR all evidence supporting the cause of the event, including but not limited to, pictures, reports, damage assessments, correspondence between lessee/operator and third parties affecting said event, etc. These documents should be properly labeled showing the issues relating to the cause of the force majeure.
The lessee/operator may be required to submit rental payments, deferred development payment, or in-lieu royalty payments on any lease(s) that contains language stating availability to maintain the lease in the absence of production or downhole operations.
In the event the lease does not contain force majeure language or that the particular fortuitous event is not covered by the existing lease language, the lease will be maintained temporarily until the lessee/operator amends the lease to reflect the language adopted by the Board at the August 10, 2005 Meeting.
OMR staff will follow up with additional steps required to maintain the lease.
On the first of each succeeding month, the lessee/operator is required to report the status of all leases affected by the force majeure event until all leases are maintained by either production or downhole operations.

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Royalties

How do I find out about my personal royalty payments?

The Office of Mineral Resources (OMR) only has responsibility for the collection of royalty payments on state-owned lands and water bottoms. Unfortunately, the office is unable to answer questions regarding royalty payments due to an individual from a lease on privately held lands. OMR recommends that individuals with such concerns retain private counsel to handle matters on such leases.

Is royalty due on gas used in field or lease operations?

In a majority of the cases, yes. Most State of Louisiana state leases require the payment of royalty on gas utilized for lease or field operations.

Is royalty due on vented or flared gas?

All gas severed from the ground is royalty-bearing for the majority of the current state lease forms. Gas should not be flared on a regular basis except when prior approval is received from the Department of Conservation due to an issue with the pipeline, well, or gathering system and then only short term. Royalty must still be paid upon the flared/vented gas even with the Department of Conservation approval for flaring. Gas utilized within a closed gas lift system that has not been flared/vented is not royalty-bearing.

Is royalty due on flash gas?

Gas flashed from oil is royalty-bearing whether recovery occurs prior to the point of sale or if flared/vented.

Is royalty due on gas loss in the line?

Under normal circumstances, no. However, the lessee is responsible for maintaining equipment and lines within the field and any excessive loss is subject to question as to whether the loss was unavoidable or a result of poor field management.

What deductions or costs may be taken in computing state royalty?

The State Mineral and Energy Board (Board) has, over the years, recognized the applicability of certain deductions under most of its state lease forms. Generally, the Board includes reasonable transportation costs for oil and gas when the product is delivered from the field to a point of delivery outside the field in which the production occurred and reasonable gas compression charges where gas must be compressed for insertion into a sales line. In addition, the lawful amount of severance tax allocable to royalties and paid to the Department of Revenue may be deducted from royalty payments.

Are the oilfield site restoration fees levied under R.S. 30:87 deductible in computing State royalty?

No. LA R.S. 30:87(E) provides that “The fees provided for in Subsections A and B of this Section shall be borne by the responsible parties and not by the royalty and overriding royalty owner.” Other types of fees that may be levied by the State are also not deductible in computing State royalty.

Can I deduct and how do I deduct severance taxes charged on fuel and shrinkage in a gas processing plant?

Even though fuel and shrinkage are not royalty-bearing, severance taxes charged on these items may be deducted in computing gas royalty. Add the severance taxes paid for fuel and shrinkage to the severance tax for the sales of gas.

What is the statute of limitations on State royalty?

There is no statute of limitations on State royalty. Civil Code Article 3494 provides -

The following actions are subject to a liberative prescription of three years:

An action for the recovery of compensation for services rendered, including payment of salaries, wages, commissions, tuition fees, professional fees, fees and emoluments of public officials, freight, passage, money, lodging, and board;
An action for arrearages of rent and annuities;
An action on money lent;
An action on an open account; and
An action to recover underpayments or overpayments of royalties from the production of minerals, provided that nothing herein applies to any payments, rent, or royalties derived from state-owned properties.

Will I be excused from interest and penalties on late State royalty payments because the State has not executed a division order?

Execution of a Division Order has never been required by the State Mineral & Energy Board or any existing State Lease form as a prerequisite to the payment of royalty. Title 31, Section 138.1 of the Louisiana Revised Statutes provides that:

A division order may not alter or amend the terms of the oil and gas lease.
The execution of a division order is not a condition precedent to receiving payment from a lessee. The lessee shall not withhold royalty payments because his lessor has not executed a division order.

What is a volume factor and how is it used in computing State royalty?

Where a payor company reports and pays royalty on less than 100% of the total LUW production, the volume factor designates the percentage of the total (100%) property (LUW Code) volume to which the payor is entitled and on which the payor will report royalties paid to the state. Since the calculation of property decimal assumes that the payor will report 100% of the LUW volume, the volume factor is used to adjust the payor decimal to account for the difference between the LUW volume and the volume the payor will report. The payor company must inform the Office of Mineral Resources via the payor register of the percentage of volume that will be reported on the State royalty report.

How do I remit Royalty Payments?

Contact the Office of Mineral Resources to obtain your payor number and complete a payor information sheet, then prepare a payor notification form for each of the properties on which payment will be made. Royalty payments are to be made monthly. Oil royalty is due on the 25th of the month following disposition. Gas and plant products are due on the 25th of the 2nd month following disposition.

How do I remit royalty online?

Click here to remit royalty online.

How do I obtain royalty payment information?

An LUW (Lease, Unit, or Well) code is a six-digit code assigned by the Office of Conservation for recording production. OMR uses the same LUW code to record royalty payments. The Payor Register Report allows the user to view all the current payors for a LUW code. The Property Decimal Report is a report that contains information that is used in establishing the payor decimal. This report allows the user the option of obtaining historical data for a specific LUW code.

How do I respond to audits?

An audit engagement letter is issued to a payor several weeks prior to the start of an audit. This office is flexible to changes in accommodations as warranted. An audit report and/or billing will be submitted to the company upon completion of the audit. A company may make payments during the audit as exceptions become apparent. If you disagree with the audit billing, a written response explaining your reasons along with any supporting documentation should be sent to the Audit Director. All audit payments should include the royalty and interest.

A company has thirty (30) days from payment of the audit to submit the correcting State Royalty (SR) report. This special audit State Royalty Report should be submitted separately from the monthly state royalty report. All penalty waiver requests must be detailed in writing and are granted by the State Mineral & Energy Board or their designee. Interest charges cannot be waived.

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Seismic Permits

How do you obtain a Seismic Permit on State-Owned Lands and Water Bottoms?

Prior to conducting seismic activities on state-owned lands or water bottoms, a permit must be obtained from the Office of Mineral Resources (OMR), or, if the state-owned lands or water bottoms are leased, a permit or permission must be obtained from the state lessee.

OMR issues two types of seismic permit:

Non-exclusive seismic permits (“regular seismic permits”) are generally issued within 15 days of receipt of a properly completed application and acceptable base map. The term is for one year. OMR will continue to issue other seismic permits and accept lease nominations in the permit area.
The Exclusive Geophysical Agreement (EGA) issuing process usually takes three (3) to four (4) months. The EGAs have a term of 18 months with an optional six (6) month extension. Under an EGA, the permittee may obtain exclusive rights to acquire seismic data, nominate acreage for lease, and select acreage to be leased following seismic acquisition in the area of the EGA.

Do I need a permit to acquire seismic data on State-owned lands or water bottoms?

Yes, if the State-owned lands or water bottoms are unleased, a permit must be obtained from the Office of Mineral Resources (OMR). If the State-owned lands or water bottoms are leased, a permit or permission from the State lessee is needed.

Prior to conducting seismic activities in the State of Louisiana, you are responsible for and must acquire permission or permits from all applicable property-owning entities and Federal, State, Parish, and Local governmental agencies having jurisdiction over seismic activities within the geographic boundaries of the area in which seismic activities are to be conducted, including private landowners, public agencies, State agencies, the State of Louisiana or the Federal government and its various agencies.

What kind of seismic permit do I need?

This depends on your time frame and whether or not you want exclusive rights to acquire seismic data and/or state leases in your area of interest. There is one (1) type of Non-Exclusive seismic permit and three (3) types of Exclusive geophysical agreements (EGA) available for use on state-owned lands and water bottoms.

Non-exclusive seismic permits are generally issued within fifteen (15) days of receipt of a properly completed application and acceptable base map. The term is for one (1) year. OMR will continue to issue other seismic permits and accept lease nominations in the permit area.

The Exclusive Geophysical Agreement (EGA) issuing process usually takes three (3) to four (4) months. The EGAs have a term of 18 months with an optional six (6) month extension. Under an EGA, the permittee may obtain exclusive rights to acquire seismic data, nominate acreage for lease, and select acreage to be leased following seismic acquisition in the area of the EGA.

How do I obtain a Non-Exclusive seismic permit?

Submit two (2) copies of a properly completed Application for Non-Exclusive Seismic Permit and acceptable base map to:

Geology Lands Administrator
Office of Mineral Resources
Louisiana Department of Energy and Natural Resources
617 N. Third Street, 8th Floor
Baton Rouge, LA 70802

or

Geology Lands Administrator
Office of Mineral Resources
Louisiana Department of Energy and Natural Resources
Post Office Box 2827
Baton Rouge, LA 70821-2827

The Office of Mineral Resources (OMR) Staff will verify application information and map acreages, prepare the permit, and send the permit and invoice to you for signature and payment. Your permit becomes effective when OMR receives your signed permit and permit fee.

How do I obtain an Exclusive Geophysical Agreement?

Contact OMR to set up a meeting with OMR staff to present your area of interest and the type of EGA being requested. Plan to explain your survey objectives and present an acceptable base map.

OMR's staff will determine if an EGA should be granted in the area of interest and will also decide under what special conditions, if any, the EGA should be granted. The type of EGA requested and the level of leasing activity in the area are some of the determining factors used by OMR's Staff in considering an EGA. For example, an area experiencing leasing activity may or may not be considered appropriate for an EGA because the area would have to be taken out of commerce for a minimum of 18 months or a maximum of 2 years if an EGA should be granted in the area of interest.

After the area to be nominated has been presented to OMR's Staff for review, the area will be evaluated to set the minimum terms for seismic fee, bonus amount, and royalty. The applicant will then be provided with this information. If accepted by the applicant, then these minimums will be recommended to the State Mineral and Energy Board (Board) for approval. All information given to OMR's Staff will be held confidential, including the area to be nominated. However, until the prospective area has been approved for nomination by the Board, seismic permitting and leasing will still be allowed within the area to be nominated. Additionally, other parties interested in nominating the same area for one of the EGAs will similarly be met with and heard by OMR Staff. No party will be apprised of any other party's interest in the same area. If there are multiple parties interested in nominating the same or overlapping areas, the Board will choose which applicant will be accepted. Approval of any area, as well as the size of the area to be nominated in an EGA, is generally determined by, but not limited to, considerations of the leasing, drilling, and exploration activities in the area, as well as the overall benefits to the State that may be derived as a result of the area being nominated.

Upon Board approval, the applicant may then apply to the OMR Leasing Section to nominate the area for the designated lease sale for public bidding. A nomination letter, including plat and legal description of the area, with an application fee of $400.00 must be submitted according to the date schedule set by the OMR Leasing Section. The full description, all provisions, minimum bonus, royalty, type and terms of the EGA will then be advertised, as prescribed by State law. Generally, the process is similar to mineral leasing.

The applicant may bid for the EGA at the advertised state lease sale. An EGA will be awarded to the winning bidder at the lease sale.

What are the main differences between Type I, Type II, and Type III EGA’s?

For an EGA Type I, the State will not grant any new seismic agreements or permits in the nominated area during the Initial Term of this seismic agreement, or the Option Term, if activated. However, the State will exercise its rights and prerogatives to accept any or all nominations for mineral leases within the seismic agreement area during the Initial Term or the Option Term, if activated. Any new mineral leases granted during the term of the EGA will be subject to the provisions within the agreement and the EGA applicant will not have to deal with any State lessee to conduct seismic operations over the leased acreage.

For an EGA Type II, the State will not grant any new seismic permits or agreements on, or lease the nominated acreage, or any part thereof, during the Initial Term of this seismic agreement, or the Option Term, if activated, except that a buffer zone of one-half (1/2) mile around each pre-existing lease or Operating Agreement within the nominated area will be in effect. The buffer zone shall be open for nomination for leasing only during the Initial Term of this seismic agreement, or the Option Term, if activated, and only by the mineral lessee or by the EGA awardee.

And the Type II EGA Grantee may exclusively nominate tracts for leasing for the normal public bid mineral lease sale, which will be limited in size to 1500 acres per tract with an aggregate amount not to exceed one-third (1/3) of all state acreage within the geographical boundaries of the Agreement area, within the Initial Term of the Option Term, if activated.

For an EGA Type III, the State will not grant any new seismic permits or agreements on, or lease the nominated acreage, or any part thereof, during the Initial Term of this seismic agreement, or the Option Term, if activated, except that a buffer zone of one-half (1/2) mile around each pre-existing lease or Operating Agreement within the nominated area will be in effect. The buffer zone shall be open for nomination for leasing only during the Initial Term of this seismic agreement, or the Option Term, if activated, and only by the mineral lessee or by the EGA awardee.

The Type III EGA Grantee shall have the exclusive right, prior to the end of the Initial Term or the Option Term, if activated, to select tracts for leasing of not more than 1500 acres per tract each, with the total acreage of all selected tracts not to exceed more than one-third (1/3) of all State acreage within the geographical boundaries of the nominated area.

The Type III EGA Grantee shall have the exclusive right to enter into lease agreements with the State on each tract for the consideration originally bid (which shall not be less than the minimum acceptable per acre bonus and royalty as determined by the Board staff) and under the terms of the Louisiana State Lease Form, as amended. The forms for the agreements set forth above may be modified by the Board, at its option, at any time, but such modifications shall not affect existing agreements. Potential nominators should check with OMR for any such modifications.

Are there rules and regulations for seismic permits on State-owned lands and water bottoms?

Yes, the Office of Mineral Resources has rules for geophysical and geological surveys. Permits for geophysical and geological surveys are also covered in the Louisiana Revised Statutes Title 30, Chapter 30, Sections 211 through 216.

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Operating Agreements

How do you acquire an Operating Agreement?

Review La. R.S. 30:209(4)(a) to determine if your situation fits the general criteria to qualify for an Operating Agreement, then discuss your situation with OMR staff to confirm that your situation may qualify for an operating agreement. After the meeting, if the staff has indicated it will recommend an operating agreement in your case, you must send a letter to OMR requesting to have this matter placed on the Legal and Title Committee Agenda at the next State Mineral and Energy Board Meeting. If the Board concurs with the staff, it will authorize taking the affected property out of commerce and grant authority to the staff to negotiate an operating agreement.

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Operations

How do I obtain information about 8(g) Plans?

The Louisiana offshore 8(g) zone refers to the area located between three (3) and six (6) miles from the coastal boundary of Louisiana – as described in the OCS Lands Act. The Office of Mineral Resources (OMR) is the designated agency for the State of Louisiana to receive and evaluate Exploration Plans (EPs) and Development Operations Coordination Documents (DOCDs) on offshore Federal leases located totally or partially within the Louisiana 8(g) area. Review by OMR is exclusive of any formal consistency evaluation carried out under the state’s Coastal Zone Management Program.

Am I required to contact the Office of Mineral Resources on my proposed activity in the 8(g) zone?

No, if the public information copy of your plan includes the well bottom hole locations, then the Office of Mineral Resources (OMR) has sufficient information to determine whether or not the state may be affected by your plan.

What can I do to expedite the Office of Mineral Resources review of my proposed plan?

While Office of Mineral Resources (OMR) cannot respond to a proposed plan until it has received notification from the federal government, you may facilitate and expedite OMR's review process by forwarding a copy of Form MMS-137 and a well location plat showing surface and bottom hole location for each well in your plan.

When is it good to provide the Office of Mineral Resources with some of the proprietary information in my proposed plan?

When the wells in your plan have bottom hole locations within 2000 feet of the state/federal boundary, OMR may require additional information to properly evaluate potential reservoir limits with respect to state acreage.

How do you Request a 29-E Waiver on a State Lease Well?

The State Mineral and Energy Board (Board) has authorized the Secretary or staff member designated by him to act on behalf of the Board to waive Office of Conservation State-wide Order 29-E spacing requirements as pertains to a state lease well, provided, a reasonable unit for the state lease well involved is formed within one hundred eighty (180) days after completion of the well.

How do you Obtain a Letter of No Objection for a 29-E Exception to Well Spacing?

Send a plat depicting your well surface and bottom hole location, a directional survey and an annotated copy of the well log along with a letter explaining the situation which requires a letter of no objection to:

Geology Lands Administrator
Office of Mineral Resources
Louisiana Department of Energy and Natural Resources
P.O. Box 2827
Baton Rouge, Louisiana 70821-2827

How do I obtain approval for an escrow agreement so that I can start producing my well?

After you submit the information referenced above, the Office of Mineral Resources will issue a letter of no objection with the requirements that:

You escrow all revenue from production and deposit the revenue into an FDIC insured interest bearing account;
Each month you submit a copy of the escrow account’s monthly statement to the Mineral Income Division of the Office of Mineral Resources;
You form a reasonable unit within (one hundred eighty) 180 days after well completion;
You disburse revenue from the escrow account on a unit basis.

How do you obtain approval for commingling on State leases?

Submit a cover letter that includes information identifying the field and parish names, state leases and properties affected by the application, a short explanation of the commingling proposal, and the facility name and the Office of Conservation facility code number.

Attach a copy of any application for commingling submitted to the Office of Conservation or BOEM and any other subsequent correspondence received in response to the application.

How do you obtain a Voluntary Unit Agreement on State Leases?

Click here to obtain a Voluntary Unit Agreement on State Leases.

How do you qualify a well as commercially productive?

The State Mineral and Energy Board (Board) requires its lessees to furnish information to substantiate the commercial productivity of a lease under which the lessee wishes to invoke the shut-in provisions of the lease, the gas marketing provision of the rider to the state lease form, or any relative lease amendment granted by the Board.

First, submit the information listed in Requirements for Verification of Commercial Productivity of Non-Producing Leases to the Engineering Section of the Office of Mineral Resources (OMR). The Engineering Staff will review the submitted data and issue a letter of qualification or denial of qualification. If the well will produce to an interstate gas market, the lease form should be amended with the Agreement to Defer Production of State Royalty Gas and the Amendment of Deferred Gas Production Agreement.

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