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(i) partially in water less than 200 
meters deep; and 
(ii) to which no royalty relief provi-
sions in law or lease terms apply. 
(2) SIDETRACK.— 
(A) IN
GENERAL.—The term ‘‘sidetrack’’ 
means a well resulting from drilling an addi-
tional hole to a new objective bottom-hole loca-
tion by leaving a previously drilled hole. 
(B) INCLUSION.—The term ‘‘sidetrack’’ in-
cludes— 
(i) drilling a well from a platform slot 
reclaimed from a previously drilled well; 
(ii) re-entering and deepening a pre-
viously drilled well; and 
(iii) a bypass from a sidetrack, includ-
ing drilling around material blocking a hole 
or drilling to straighten a crooked hole. 
(3) ULTRA DEEP WELL.—The term ‘‘ultra deep 
well’’ means a well drilled with a perforated interval, 
the top of which is at least 20,000 feet true vertical 
depth below the datum at mean sea level. 
(b) REGULATIONS.— 
(1) IN GENERAL.—Not later than 180 days after 
the effective date of this section, in addition to any
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other regulations that may provide royalty incentives 
for natural gas produced from deep wells on oil and 
gas leases issued pursuant to, or regulated under, the 
Outer Continental Shelf Lands Act (43 U.S.C. 1331 
et seq.), the Secretary shall issue regulations granting 
royalty relief suspension volumes of not less than 
35,000,000,000 cubic feet with respect to the produc-
tion of natural gas from ultra deep wells on leases 
issued in shallow waters located in the Gulf of Mexico 
wholly west of 87°, 30’’ West longitude that are issued 
before the date that is 180 days after the date of en-
actment of this Act. 
(2) SUSPENSION VOLUMES.—The Secretary may 
grant suspension volumes of less than 35,000,000,000 
cubic feet in any case in which— 
(A) the ultra deep well is a sidetrack; or 
(B) the lease has previously produced from 
wells with a perforated interval the top of which 
is at least 15,000 feet true vertical depth below 
the datum at mean sea level. 
(c) LIMITATION.—The Secretary shall not grant roy-
alty incentives under this section if the average annual nat-
ural gas price on the New York Mercantile Exchange exceeds 
a threshold price specified, and adjusted for inflation, by 
the Secretary.
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(d) APPLICABILITY.— 
(1) IN GENERAL.—Royalty incentives under this 
subsection apply only to natural gas production from 
ultra deep wells that are drilled after the date of en-
actment of this Act. 
(2) REVIEW AND SUSPENSION.—Not earlier than 
10 years after the date of enactment of this Act, the 
Secretary may— 
(A) review the relief granted under this sec-
tion; and 
(B) by regulation, modify or suspend the re-
lief. 
(e) EFFECTIVE DATE.—This section takes effect on Oc-
tober 1, 2006. 
SEC. 315. ROYALTY RELIEF FOR DEEP WATER PRODUCTION. 
(a) IN GENERAL.—Subject to subsections (b) and (c), 
for each tract located in water depths of greater than 400 
meters in the Western and Central Planning Area of the 
Gulf of Mexico (including the portion of the Eastern Plan-
ning Area of the Gulf of Mexico encompassing whole lease 
blocks lying west of 87 degrees, 30 minutes West longitude), 
any oil or gas lease sale under the Outer Continental Shelf 
Lands Act (43 U.S.C. 1331 et seq.) occurring during the 
5-year period beginning on the date of enactment of this 
Act shall use the bidding system authorized under section
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8(a)(1)(H) of the Outer Continental Shelf Lands Act (43 
U.S.C. 1337(a)(1)(H)). 
(b) SUSPENSION OF ROYALTIES.—The suspension of 
royalties under subsection (a) shall be established at a vol-
ume of not less than— 
(1) 5,000,000 barrels of oil equivalent for each 
lease in water depths of 400 meters or more but less 
than 800 meters; 
(2) 9,000,000 barrels of oil equivalent for each 
lease in water depths of 800 meters or more but not 
greater than 1,600 meters; and 
(3) 12,000,000 barrels of oil equivalent for each 
lease in water depths greater than 1,600 meters. 
(c) LIMITATION.—The Secretary may place limitations 
on royalty relief granted under this section based on market 
price. 
SEC. 316. ALASKA OFFSHORE ROYALTY SUSPENSION. 
Section 8(a)(3)(B) of the Outer Continental Shelf 
Lands Act (43 U.S.C. 1337(a)(3)(B)) is amended by insert-
ing ‘‘and in the Planning Areas offshore Alaska,’’ after 
‘‘West longitude,’’. 
SEC. 317. OIL AND GAS LEASING IN THE NATIONAL PETRO-
LEUM RESERVE IN ALASKA. 
(a) TRANSFER OF AUTHORITY.—
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(1) REDESIGNATION.—The Naval Petroleum Re-
serves Production Act of 1976 (42 U.S.C. 6501 et seq.) 
is amended by redesignating section 107 (42 U.S.C. 
6507) as section 108. 
(2) TRANSFER.—The matter under the heading 
‘‘EXPLORATION OF NATIONAL PETROLEUM RESERVE IN 
ALASKA’’ under the heading ‘‘ENERGY
AND MIN-
ERALS’’ of title I of Public Law 96–514 (42 U.S.C. 
6508) is— 
(A) transferred to the Naval Petroleum Re-
serves Production Act of 1976 (42 U.S.C. 6501 
et seq.); 
(B) redesignated as section 107 of that Act; 
and 
(C) moved so as to appear after section 106 
of that Act (42 U.S.C. 6506). 
(b) COMPETITIVE LEASING.—Section 107 of the Naval 
Petroleum Reserves Production Act of 1976 (as amended by 
subsection (a)(2)) is amended— 
(1) by striking the heading and all that follows 
through ‘‘Provided, That (1) activities’’ and inserting 
the following:
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‘‘SEC. 107. COMPETITIVE LEASING OF OIL AND GAS. 
‘‘(a) IN GENERAL.—The Secretary shall conduct an ex-
peditious program of competitive leasing of oil and gas in 
the Reserve in accordance with this Act. 
‘‘(b) MITIGATION OF ADVERSE EFFECTS.— 
‘‘(1) IN GENERAL.—Activities’’; 
(2) in subsection (b)(1) (as designated by para-
graph (1)), by striking ‘‘to mitigate’’ and inserting 
‘‘to prevent to the extent practicable, and to miti-
gate,’’; 
(3) by striking ‘‘Alaska (the Reserve); (2) the’’ 
and inserting ‘‘Alaska. 
‘‘(2) CERTAIN RESOURCES AND FACILITIES.—In 
carrying out the leasing program under this section, 
the Secretary shall minimize, to the extent prac-
ticable, the impact to surface resources and consoli-
date facilities. 
‘‘(c) LAND
USE
PLANNING; BLM WILDERNESS 
STUDY.—The’’; 
(4) by striking ‘‘Reserve; (3) the’’ and inserting 
‘‘Reserve. 
‘‘(d) FIRST LEASE SALE.—The;’’; 
(5) by striking ‘‘4332); (4) the’’ and inserting 
‘‘4321 et seq.). 
‘‘(e) WITHDRAWALS.—The’’;
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(6) by striking ‘‘herein; (5) bidding’’ and insert-
ing ‘‘under this section. 
‘‘(f) BIDDING SYSTEMS.—Bidding’’; 
(7) by striking ‘‘629); (6) lease’’ and inserting 
‘‘629). 
‘‘(g) GEOLOGICAL STRUCTURES.—Lease’’; 
(8) by striking ‘‘structures; (7) the’’ and insert-
ing ‘‘structures. 
‘‘(h) SIZE OF LEASE TRACTS.—The’’; 
(9) by striking ‘‘Secretary; (8)’’ and all that fol-
lows through ‘‘Drilling, production,’’ and inserting 
‘‘Secretary. 
‘‘(i) TERMS.— 
‘‘(1) IN GENERAL.—Each lease shall be issued for 
an initial period of not more than 10 years, and shall 
be extended for so long thereafter as oil or gas is pro-
duced from the lease in paying quantities or drilling 
or reworking operations, as approved by the Sec-
retary, are conducted on the leased land. 
‘‘(2) TERMINATION.—No lease issued under this 
section covering lands capable of producing oil or gas 
in paying quantities shall expire because the lessee 
fails to produce the same unless the lessee is allowed 
a reasonable time, which shall be not less than 60 
days after notice by registered or certified mail, with-
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in which to place the lands in producing status or 
unless, after such status is established, production is 
discontinued on the leased premises without permis-
sion granted by the Secretary under the provisions of 
this Act. 
‘‘(3) RENEWAL
OF
LEASES
WITHOUT
DISCOV-
ERIES.—At the end of the primary term of a lease, 
the Secretary shall renew for one additional 10-year 
term a lease that does not meet the requirements of 
paragraph (1) if the lessee submits to the Secretary 
an application for renewal not later than 60 days be-
fore the expiration of the primary lease, pays the Sec-
retary a renewal fee of $100 per acre of leased land, 
and— 
‘‘(A) the lessee provides evidence, and the 
Secretary agrees that, the lessee has diligently 
pursued exploration that warrants continuation 
with the intent of continued exploration or fu-
ture potential development of the leased land; or 
‘‘(B) all or part of the lease 
‘‘(i) is part of a unit agreement cov-
ering a lease described in subparagraph (A); 
and 
‘‘(ii) has not been previously con-
tracted out of the unit.
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‘‘(4) APPLICABILITY.—This subsection applies to 
a lease that is in effect on or after the date of enact-
ment of the Energy Policy Act of 2005. 
‘‘(j) UNIT AGREEMENTS.— 
‘‘(1) IN GENERAL.—For the purpose of conserva-
tion of the natural resources of all or part of any oil 
or gas pool, field, reservoir, or like area, lessees (in-
cluding representatives) of the pool, field, reservoir, or 
like area may unite with each other, or jointly or sep-
arately with others, in collectively adopting and oper-
ating under a unit agreement for all or part of the 
pool, field, reservoir, or like area (whether or not any 
other part of the oil or gas pool, field, reservoir, or 
like area is already subject to any cooperative or unit 
plan of development or operation), if the Secretary 
determines the action to be necessary or advisable in 
the public interest. In determining the public interest, 
the Secretary shall, among other things, examine the 
extent to which the unit agreement will minimize the 
impact to surface resources of the leases and will fa-
cilitate consolidation of facilities. 
‘‘(2) CONSULTATION.—In making a determina-
tion under paragraph (1), the Secretary shall consult 
with the State of Alaska or a Regional Corporation 
(as defined in section 3 of the Alaska Native Claims