Checking the box for "oil and gas" will report 15% of your royalty income as percentage depletion. Depending on the purpose of the extraction, the depletion rate may be different, in a range from 7% to 22% (see 26 U.S. Code § 613 - Percentage depletion for a complete list).
If you choose to use a different percentage, you can enter this as a miscellaneous expense for the royalty property instead of choosing the default 15%.
What if depletion isn't reported in box 20 with code T on my 1065 K-1? Should I still enter it myself on the K-1 form with Code T and calculate the depletion?
No. If the royalty income was reported on Schedule K-1 Box 17 Code D, depletion should be calculated and reported in Box 20 Code T. You might check with the company that sent you the K-1 to confirm that Box 20 Code T should be blank.
However, if the Royalties were reported on Schedule K-1 Box 4, TurboTax should have created a Schedule E for this income. In this case, be sure to review that Schedule E (under Rental Properties & Royalties) to indicate the royalties were from mineral interests. The program will ask you about depletion during that interview, which is where you can enter the amount you have calculated.