Chevron Press Release - Chevron, Conoco And Murphy Sue U.S. Government For Breach Of Contract
NEW ORLEANS, July 24, 2000 -- Chevron U.S.A. Inc., Conoco Inc., and Murphy Exploration & Production Co. today filed a lawsuit against the U.S. government for denying the companies' "timely and fair review" of plans, permits and an appeal concerning an abundant natural gas field in the eastern Gulf of Mexico.
The companies are partners in a proposed natural gas development project centered on federal offshore leases in the Destin Dome 56 Field, 25 miles south of Pensacola, Fla. According to the Department of Energy, the field contains potential reserves of up to 2.6 trillion cubic feet of natural gas.
The U.S. Court of Federal Claims complaint charges the U.S. government with delaying and ultimately blocking the partners from developing the field.
The project is pending a decision by the Department of Commerce. Last year, the Environmental Protection Agency stopped processing environmental permits for the project, stating it would not resume work until the Department of Commerce rendered its decision. The Department of Commerce announced last month it would not render a decision on the project until the EPA completed the environmental permits.
The partners allege this regulatory "Catch-22" constitutes breaches of lease contracts between the government and the partners and a "taking" of property rights as protected by the Fifth Amendment of the Constitution.
The suit seeks compensation for lease bonuses and rentals paid to the federal government; exploration costs; expenses incurred for the preparation of environmental studies and development plans; and opportunity costs associated with the project.
"This lawsuit is brought because the federal government refused to honor its contractual commitments by creating regulatory and administrative blockages that breached the leases," said Michael Smith, Chevron's associate general counsel.
Note to Editors:
Destin Dome 56 Unit Project partners are: Chevron U.S.A. Production Co., a subsidiary of Chevron Corp. (NYSE: CHV); Conoco Inc. (NYSE: COC.A and COC.B); and Murphy Exploration & Production Co., a subsidiary of Murphy Oil Corp. (NYSE: MUR). Chevron is the operator of the project. Each partner maintains a one-third interest in the project.
Updated: July 2000