IPAA: Royalty Rate Increase Against 'All the Above' Energy Strategy

The Independent Petroleum Association of America (IPAA) on Friday criticized a proposed plan by Department of the Interior (DOI) Secretary Ken Salazar to raise royalty rates for onshore federal lands by 50 percent, saying the plan "flies in the face of a common sense, 'all the above' energy strategy".

"Time and again, this Administration has offered counterproductive policies," said IPAA President and CEO Barry Russell in a statement, referencing President Obama's discussion of an 'all of the above' energy strategy in his State of the Union address last month. These policies stifle jobs, limit job-creating domestic energy production, and weigh down an already slow economic recovery, Russell noted.

"While Interior is of the impression that an increase in royalty rates will increase revenue generated for the federal government, the reality is that such a motion will deter production, reduce investment and cost the nation millions of dollars in investment opportunity," Russell commented.

An IPAA spokesperson told Rigzone.com that the organization was awaiting official action following Salazar's announcement about the royalty rate increase during a U.S. House of Representatives Appropriations hearing.

DOI has been studying the issue of raising royalty rates for a few years, the spokesperson said, noting that DOI can take action to implement the royalty change without going through Congress.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com

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Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
David | Feb. 28, 2012
What an ignorant comment. Since Jimmy Carters invention of the Dept. of Energy, BILLIONS AND BILLIONS have been spent to find "viable substitutes" - results? NADA - at least nothing "viable". I bet you voted for Obama - i.e. - a lefty that thinks "some where over the rainbow lies utopia".

Wendy Weinbaum | Feb. 20, 2012
This is a good example of why no one should EVER do business with the Fed.gov. SHUN THEM. They dont keep their word, and retroactive law and regulation changes are a daily occurrance.

JB | Feb. 18, 2012
Mineral owners have been demanding more royalty on recently executed leases. States have as well. The industry has and will continue to pay these increased royalties, if the prospect warrants it. The cost will be passed on to consumers. With the US debt being what it is, and me being a part-owner of the US minerals, I say, "Yes, lets raise the royalty we demand from producers." Its irresponsible not to. If YOU owned minerals, would you lease at the old 12.5% standard royalty from the late 40s and 50s, or 3/16ths we saw in the 80s, or 20% to 25% we now see the State of North Dakota and TX/OK pro owners command? Honestly....its what the market allows, it is a reflection of the true cost of producing the miracle elixer that is oil, and the sooner we see prices reflect the cost, the sooner we will be prompted to truly get off our asses and find viable substitutes.

Andy Goddeyne | Feb. 18, 2012
Ken is an idiot who put hundreds if not thousands of hard working men in the oil industry out of work in Co. and Utah. We will all be glad when he is gone from office.


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