SHELL SETTLES NATURAL GAS DISPUTE
Mar 20, 2002
The Associated Press
MONTGOMERY, Ala. –– Shell Oil has paid the state $27 million
to settle pending litigation over the underpayment of natural gas royalties,
the governor's office announced Tuesday.
The state sued Shell in June 1999 in Mobile County Circuit Court, accusing
the company of underpaying royalties on lease contracts for natural gas
drilled in Mobile Bay from 1991 to 2000.
Fifty percent of the $27 million will be deposited in the Alabama Trust
Fund, as part of the state's compensatory damages claim. The other
50 percent will be deposited in the Alabama General Fund.
Shell also paid $6.5 million for attorneys' fees and court costs for
the state, Siegelman officials said.
Shell spokeswoman Kelly Coone, at corporate headquarters in New Orleans,
said Wednesday, "Shell is pleased that these matters have been resolved
and looks forward to continuing a mutually beneficial relationship with
the State of Alabama and her citizens."
Shell is the third defendant in suits brought by the state on lessees
of natural gas drilling rights in state waters.
The first case, against Exxon Mobil, went to trial in Montgomery in December
2000. The case involved $87.7 million in disputed royalties and interest,
but the jury decided to levy a record $3.4 billion in punitive damages
on top of that.
Attorneys for the state had asked for a record-setting verdict to punish
Exxon for what they contended was persistent cheating on natural gas royalties
due the state. Exxon has appealed the verdict to the Alabama Supreme Court.
In December, a jury awarded the state more than $24 million in its dispute
with Hunt Petroleum Corp.
© 2002 The Associated Press