Shell to pay $2.2M over underpayment of royalties

WASHINGTON (AP) -- The Justice Department says Shell Oil Co. and affiliates will pay the government $2.2 million to settle allegations that the companies underpaid royalties on natural gas from federal land. The action marks the latest agreement in a lawsuit against various oil and gas companies that has resulted in $233 million in payments by the defendants. In an earlier part of the case, Shell paid $56 million to settle claims that it had underpaid royalties on natural gas in the Gulf of Mexico. The recent settlement resolved claims on Shell's onshore leases. Regarding the $2.2 million, the government said Shell had underpaid royalties by improperly reporting processed gas as unprocessed gas and by deducting from royalty values the cost of boosting gas up to pipeline pressure. Published: Wed, Jun 1, 2011