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Shell Hires Former Interior Secretary Norton

Royal Dutch Shell said Wednesday that it has hired former U.S. Interior Secretary Gale Norton as general counsel for Shell Exploration and Production's unconventional resources division. Norton, who stepped down as Interior secretary in March, will provide and coordinate legal services for Shell starting in mid January, the company said.

The unconventional resources division develops and tests technology that is designed to tap natural gas and oil in tight sands, shales, coal beds and other formations.

Norton, who was the first woman ever to head the Interior Department, left the agency last March after five years of service in the Bush administration and was replaced by Dirk Kempthorne, former governor of Idaho (see Daily GPI, March 13 and June 9). In her letter of resignation, Norton indicated that the partisanship in Washington, DC, factored into her decision.

However, her resignation also came at a time when Interior was under attack from Capitol Hill and the press for the method it used to calculate royalties for oil and natural gas production on federal lands. Acting on a directive from Congress, Interior's Minerals Management Service (MMS) gave producers a break on royalties in the late 1990s prior to Norton's arrival, when oil and gas prices were low, to spur exploration and production in the deepwater Gulf. The lease agreements contained language stating that the price relief would come to an end when oil and gas market prices soared above a certain level. However, the MMS left this language out of 1998 and 1999 leases -- a mistake that is costing the government billions in lost royalties.

Shell was among the companies holding leases with the missing language on price thresholds and earlier this month joined several other producers in signing new contracts with MMS that call for the recovery of royalties only on new production (starting Oct. 1 of this year). The contracts do not require payment of royalties on past production from the faulty leases. The five producers, BP, ConocoPhillips, Marathon Oil, Shell and Walter Oil and Gas, owned 131 of the 570 royalty-free leases that were issued in 1998-1999 (see Daily GPI, Dec. 18).

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