oil estimated to be contained within any tract shall 
be excluded; 
‘‘(5) provide that any crude oil produced from 
a well and reinjected into the leased tract shall not 
be subject to payment of royalty, and that the Sec-
retary shall consider, in setting the royalty rates for 
a natural gas lease, the additional cost to the lessee 
of not producing any crude oil; and 
‘‘(6) provide that any Federal law that applies 
to an oil and gas lease on the outer Continental 
Shelf shall apply to a natural gas lease unless other-
wise clearly inapplicable.’’. 
SEC. 6. GRANT OF LEASES BY SECRETARY. 
Section 8 of the Outer Continental Shelf Lands Act 
(43 U.S.C. 1337) is amended—
(1) in subsection (a)(1) by inserting after the 
first sentence the following: ‘‘Further, the Secretary 
may grant natural gas leases in a manner similar to 
the granting of oil and gas leases and under the var-
ious bidding systems available for oil and gas 
leases.’’; 
(2) by adding at the end of subsection (b) the 
following: 
‘‘The Secretary may issue more than one lease for a given 
tract if each lease applies to a separate and distinct range
of vertical depths, horizontal surface area, or a combina-
tion of the two. The Secretary may issue regulations that 
the Secretary determines are necessary to manage such 
leases consistent with the purposes of this Act.’’; 
(3) by amending subsection (p)(2)(B) to read 
as follows: 
‘‘(B) The Secretary shall provide for the pay-
ment to coastal states, and their local coastal gov-
ernments, of 75 percent of Federal receipts from 
projects authorized under this section located par-
tially or completely within the area extending sea-
ward of State submerged lands out to 4 marine 
leagues from the coastline, and the payment to 
coastal states of 50 percent of the receipts from 
projects completely located in the area more than 4 
marine leagues from the coastline. Payments shall 
be based on a formula established by the Secretary 
by rulemaking no later than 180 days after the date 
of the enactment of the Deep Ocean Energy Re-
sources Act of 2006 that provides for equitable dis-
tribution, based on proximity to the project, among 
coastal states that have coastline that is located 
within 200 miles of the geographic center of the 
project.’’. 
(4) by adding at the end the following:
‘‘(q) NATURAL GAS LEASES.—
‘‘(1) RIGHT
TO
PRODUCE
NATURAL
GAS.—A 
lessee of a natural gas lease shall have the right to 
produce the natural gas from a field on a natural 
gas leased tract if the Secretary estimates that the 
discovered field has at least 40 percent of the eco-
nomically recoverable Btu content of the field con-
tained within natural gas and such natural gas is ec-
onomical to produce. 
‘‘(2) CRUDE OIL.—A lessee of a natural gas 
lease may not produce crude oil from the lease. 
‘‘(3) ESTIMATES OF BTU CONTENT.—The Sec-
retary shall make estimates of the natural gas Btu 
content of discovered fields on a natural gas lease 
only after the completion of at least one exploration 
well, the data from which has been tied to the re-
sults of a three-dimensional seismic survey of the 
field. The Secretary may not require the lessee to 
further delineate any discovered field prior to mak-
ing such estimates. 
‘‘(4) DEFINITION OF NATURAL GAS.—For pur-
poses of a natural gas lease, natural gas means nat-
ural gas and all substances produced in association 
with gas, including, but not limited to, hydrocarbon 
liquids (other than crude oil) that are obtained by
the condensation of hydrocarbon vapors and sepa-
rate out in liquid form from the produced gas 
stream. 
‘‘(r) REMOVAL OF RESTRICTIONS ON JOINT BIDDING 
IN
CERTAIN
AREAS
OF
THE
OUTER
CONTINENTAL 
SHELF.—Restrictions on joint bidders shall no longer 
apply to tracts located in the Alaska OCS Region. Such 
restrictions shall not apply to tracts in other OCS regions 
determined to be ‘frontier tracts’ or otherwise ‘high cost 
tracts’ under final regulations that shall be published by 
the Secretary by not later than 365 days after the date 
of the enactment of the Deep Ocean Energy Resources 
Act of 2006. 
‘‘(s) ROYALTY SUSPENSION PROVISIONS.—The Sec-
retary shall agree to a request by any lessee to amend 
any lease issued for Central and Western Gulf of Mexico 
tracts during the period of January 1, 1998, through De-
cember 31, 1999, to incorporate price thresholds applica-
ble to royalty suspension provisions, or amend existing 
price thresholds, in the amount of $40.50 per barrel (2006 
dollars) for oil and for natural gas of $6.75 per million 
Btu (2006 dollars). Any amended lease shall impose the 
new or revised price thresholds effective October 1, 2005. 
Existing lease provisions shall prevail through September 
30, 2005. After the date of the enactment of the Deep
Ocean Energy Resources Act of 2006, price thresholds 
shall apply to any royalty suspension volumes granted by 
the Secretary. Unless otherwise set by Secretary by regu-
lation or for a particular lease sale, the price thresholds 
shall be $40.50 for oil (2006 dollars) and $6.75 for nat-
ural gas (2006 dollars). 
‘‘(t) CONSERVATION OF RESOURCES FEES.—
‘‘(1) Not later than one year after the date of 
the enactment of the Deep Ocean Energy Resources 
Act of 2006, the Secretary by regulation shall estab-
lish a conservation of resources fee for producing 
leases that will apply to new and existing leases 
which shall be set at $9 per barrel for oil and $1.25 
per million Btu for gas. This fee shall only apply to 
leases in production located in more than 200 me-
ters of water for which royalties are not being paid 
when prices exceed $40.50 per barrel for oil and 
$6.75 per million Btu for natural gas in 2006, dol-
lars. This fee shall apply to production from and 
after October 1, 2005, and shall be treated as offset-
ting receipts. 
‘‘(2) Not later than one year after the date of 
the enactment of the Deep Ocean Energy Resources 
Act of 2006, the Secretary by regulation shall estab-
lish a conservation of resources fee for nonproducing
leases that will apply to new and existing leases 
which shall be set at $3.75 per acre per year. This 
fee shall apply from and after October 1, 2005, and 
shall be treated as offsetting receipts.’’; 
(5) by striking subsection (a)(3)(A) and redes-
ignating the subsequent subparagraphs as subpara-
graphs (A) and (B), respectively; 
(6) in subsection (a)(3)(A) (as so redesignated) 
by striking ‘‘In the Western’’ and all that follows 
through ‘‘the Secretary’’ the first place it appears 
and inserting ‘‘The Secretary’’; and 
(7) effective October 1, 2006, in subsection 
(g)—
(A) by striking all after ‘‘(g)’’, except para-
graph (3); 
(B) by striking the last sentence of para-
graph (3); and 
(C) by striking ‘‘(3)’’. 
SEC. 7. DISPOSITION OF RECEIPTS. 
Section 9 of the Outer Continental Shelf Lands Act 
(43 U.S.C. 1338) is amended—
(1) by designating the existing text as sub-
section (a);
(2) in subsection (a) (as so designated) by in-
serting ‘‘, if not paid as otherwise provided in this 
title’’ after ‘‘receipts’’; and 
(3) by adding the following: 
‘‘(b) TREATMENT OF OCS RECEIPTS FROM TRACTS 
COMPLETELY WITHIN 100 MILES OF THE COASTLINE.—
‘‘(1) DEPOSIT.—The Secretary shall deposit 
into a separate account in the Treasury the portion 
of OCS Receipts for each fiscal year that will be 
shared under paragraphs (2), (3), and (4). 
‘‘(2) PHASED-IN RECEIPTS SHARING.—
‘‘(A) Beginning October 1, 2005, the Sec-
retary shall share OCS Receipts derived from 
the following areas: 
‘‘(i) Lease tracts located on portions 
of the Gulf of Mexico OCS Region com-
pletely beyond 4 marine leagues from any 
coastline and completely within 100 miles 
of any coastline that are available for leas-
ing under the 2002–2007 5-Year Oil and 
Gas Leasing Program in effect prior to the 
date of the enactment of the Deep Ocean 
Energy Resources Act of 2006. 
‘‘(ii) Lease tracts in production prior 
to October 1, 2005, completely beyond 4
marine leagues from any coastline and 
completely within 100 miles of any coast-
line located on portions of the OCS that 
were not available for leasing under the 
2002–2007 5-Year OCS Oil and Gas Leas-
ing Program in effect prior to the date of 
the enactment of the Deep Ocean Energy 
Resources Act of 2006. 
‘‘(iii) Lease tracts for which leases are 
issued prior to October 1, 2005, located in 
the Alaska OCS Region completely beyond 
4 marine leagues from any coastline and 
completely within 100 miles of the coast-
line. 
‘‘(B) The Secretary shall share the fol-
lowing percentages of OCS Receipts from the 
leases described in subparagraph (A) derived 
during the fiscal year indicated: 
‘‘(i) For fiscal year 2006, 4.6 percent. 
‘‘(ii) For fiscal year 2007, 5.95 per-
cent. 
‘‘(iii) For fiscal year 2008, 6.8 per-
cent. 
‘‘(iv) For fiscal year 2009, 7.65 per-
cent.
‘‘(v) For fiscal year 2010, 10.20 per-
cent. 
‘‘(vi) For fiscal year 2011, 12.75 per-
cent. 
‘‘(vii) For fiscal year 2012, 15.30 per-
cent. 
‘‘(viii) For fiscal year 2013, 17.85 
percent. 
‘‘(ix) For fiscal year 2014, 20.40 per-
cent. 
‘‘(x) For fiscal year 2015, 22.95 per-
cent. 
‘‘(xi) For fiscal year 2016, 25.50 per-
cent. 
‘‘(xii) For fiscal year 2017, 28.05 per-
cent. 
‘‘(xiii) For fiscal year 2018, 30.60 
percent. 
‘‘(xiv) For fiscal year 2019, 33.15 
percent. 
‘‘(xv) For fiscal year 2020, 35.70 per-
cent. 
‘‘(xvi) For fiscal year 2021, 38.25 
percent.
‘‘(xvii) For fiscal year 2022 and each 
subsequent fiscal year, 42.50 percent. 
‘‘(C) The provisions of this paragraph shall 
not apply to leases that could not have been 
issued but for section 5(k) of this Act or section 
6(2) of the Deep Ocean Energy Resources Act 
of 2006. 
‘‘(3) IMMEDIATE RECEIPTS SHARING.—Begin-
ning October 1, 2005, the Secretary shall share 
42.50 percent of OCS Receipts derived from all 
leases located completely beyond 4 marine leagues 
from any coastline and completely within 100 miles 
of any coastline not included within the provisions of 
paragraph (2). 
‘‘(4) RECEIPTS SHARING FROM TRACTS WITHIN 
4 MARINE LEAGUES OF ANY COASTLINE.—
‘‘(A) AREAS
DESCRIBED
IN
PARAGRAPH 
(2).—
‘‘(i) Beginning October 1, 2005, and 
continuing through September 30, 2010, 
the Secretary shall share 25 percent of 
OCS Receipts derived from all leases lo-
cated within 4 marine leagues from any 
coastline within areas described in para-
graph (2). For each fiscal year after Sep-
tember 30, 2010, the Secretary shall in-
crease the percent shared in 5 percent in-
crements each fiscal year until the sharing 
rate for all leases located within 4 marine 
leagues from any coastline within areas de-
scribed in paragraph (2) becomes 42.5 per-
cent. 
‘‘(ii) During fiscal year 2016, the Sec-
retary shall conduct an analysis of all of 
the areas described in paragraph (3) and 
subsection (c)(3) to determine the total of 
OCS Receipts derived from such areas dur-
ing the period of fiscal year 2007 through 
fiscal year 2016. The Secretary shall sub-
tract the amount of $4 billion from the 
total of such OCS Receipts. If the result is 
a positive number, the Secretary shall di-
vide such positive number by $4 billion. 
The resulting quotient, not to exceed 0.5, 
shall then be multiplied times 25. The 
product of such multiplication shall be 
added to 42.5 and the sum shall be the 
percent that the Secretary shall share for 
fiscal year 2017 and all future years from 
OCS Receipts derived from all leases lo-