‘‘(4) provide that, in reviewing the adequacy of 
bids for natural gas leases, the value of any crude 
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. 207. 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 
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lease for a given tract if each lease applies to a sepa-
rate and distinct range of vertical depths, horizontal 
surface area, or a combination of the two. The Sec-
retary may issue regulations that the Secretary de-
termines are necessary to manage such leases con-
sistent with the purposes of this Act.’’; 
(3) by amending subsection (p)(2)(B) to read 
as follows: 
‘‘(B) The Secretary shall provide for the 
payment to coastal States, and their local coast-
al governments, of 75 percent of Federal re-
ceipts from projects authorized under this sec-
tion located partially or completely within the 
area extending seaward of State submerged 
lands out to 4 marine leagues from the coast-
line, 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 rule-
making no later than 180 days after the date 
of the enactment of the American Energy Pro-
duction and Price Reduction Act that provides 
for equitable distribution, based on proximity to 
the project, among coastal States that have 
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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 un-
less the Governor of the Adjacent State agrees to 
such production. 
‘‘(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. 
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‘‘(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 American Energy Production and 
Price Reduction Act. 
‘‘(s) ROYALTY SUSPENSION PROVISIONS.—After the 
date of the enactment of the American Energy Production 
and Price Reduction Act, price thresholds shall apply to 
any royalty suspension volumes granted by the Secretary. 
Unless otherwise set by the Secretary by regulation or for 
a particular lease sale, the price thresholds shall be $40.50 
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for oil (January 1, 2006 dollars) and $6.75 for natural 
gas (January 1, 2006 dollars). 
‘‘(t) CONSERVATION
OF RESOURCES FEES.—Not 
later than one year after the date of the enactment of the 
American Energy Production and Price Reduction Act, 
the Secretary by regulation shall establish 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, 2008, 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, 2009, 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)’’. 
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