U.S. officials have ordered Apache Corp. to pay a $2.7 million fine for allegedly submitting false data about its Gulf of Mexico oil production and the royalties the Houston-based company owed the federal government.
The Interior Department’s Office of Natural Resources Revenue said the fines stem from the company’s “knowing or willful” decision to keep deducting transportation costs when calculating royalty payments for some of its Gulf leases, months after being rebuked for the practice.
Auditors at the revenue office ordered Apache to stop claiming the transportation deductions on specific Gulf leases in May 2010. But while Apache initially complied, according to the Interior Department, the company began deducting the transportation costs from its royalty payments three months later.
The civil penalty was issued in late September and announced on Monday.
“Apache disagrees with this penalty,” said company spokesman Patrick Cassidy. “We will appeal it and fight it aggressively.”
The company is one of the most prolific operators in the Gulf of Mexico in terms of oil production. Apache is now the sixth-biggest oil producer in federal Gulf waters, having logged 8.8 million barrels from January through October, according to federal records.
The Office of Natural Resources Revenue routinely polices the oil and gas industry’s royalty payments to the government for energy extracted from federal lands and waters.
Paul Mussenden, the deputy assistant secretary for natural resources revenue management, stressed that “accurate reporting is essential for property royalty collection.”
It also is “a first line of defense in ensuring that ONRR collects every dollar due to the American taxpayer,” Mussenden said.