House OKs Interior Bill Forcing Renegotiation Of Oil Leases

WASHINGTON Jun 28, 2007 (Dow Jones Newswires)

The House late Wednesday passed an Interior Department budget for 2008 that could negatively impact oil and gas development.

The Interior appropriations bill - which passed by a 272-155 vote - would force re-negotiation of 1998-99 oil and gas leases that omitted royalty price thresholds, delay planned exploration and production in Bristol Bay, Alaska, and slow oil shale development.

The White House has threatened to veto the budget, saying the proposed spending plan is over spending limits and that it's opposed the forced lease re-negotiations.

Under the appropriations bill, companies that refused to re-negotiate the leases wouldn't be eligible for new lease auctions.

The Government Accountability Office estimates around $1 billion in royalties have already been lost as a result of the price thresholds omissions, and could cost tax payers an additional $9 billion in future royalties.

Although six companies - including BP PLC (BP), Royal Dutch Shell (RDSA), ConocoPhillips (COP) and Marathon (MRO) - have agreed to pay royalties on the leases on production from October 2006, they only represent a fraction of the total lease owners.

Around 40 companies representing 80% of the production haven't agreed to re-negotiate the leases, including Exxon Mobil Corp. (XOM), Total SA (TOT), Chevron Corp. (CVX) and Anadarko Petroleum Corp. (APC), according to Interior Department data. Democrats have been seeking royalty payments for all output from the leases.

The Senate Appropriations Committee voted against a similar provision in their Interior budget plan last week.

The bill could also delay oil and gas leasing in Bristol Bay by requiring further environmental impact studies.

The area, scheduled to be opened for lease auction in the Minerals Management Service's five-year lease sale plan, is estimated to hold approximately 23 trillion cubic feet of natural gas reserves, and millions of barrels of oil.

The provision calls for greater federal environmental studies of the impacts of drilling in Bristol Bay, which is in Alaska's North Aleutian Basin. Under the proposal, the MMS, the U.S. Geological Survey, the GAO and several other federal agencies would be required to conduct in-depth analyses of exploration in the basin.

An amendment to the bill approved by the House would also slow Interior's plan for oil shale development. Rep. Mark Udall's, D-Colo., amendment would prohibit federal dollars for preparation of final rules for commercial lease sales.

The department's Bureau of Land Management last August initiated the first steps towards a national oil-shale lease sale, posting a notice inviting public comments for proposed rule-making for oil-shale. Royal Dutch Shell is one of several companies working on new shale extraction technology.

Industry experts estimate more than 1 trillion barrels worth of oil may be extracted from the shales, but companies have yet to develop technology that would make development economically feasible or environmentally sustainable.

The House rejected several proposals that would have increased drilling access on the Outer Continental Shelf in areas currently off limits.

Copyright (c) 2007 Dow Jones & Company, Inc.

Related Companies
 Company: BP plcmore info


 - Canada Rules Out Arctic Oil Drilling Extensions for ExxonMobil, BP (Jan 6)
 - Samsung Wins Mad Dog 2 Fabrication Contract (Jan 5)
 - Egypt Signs $220M Of Oil And Gas Deals (Dec 28)
 Company: Exxon Mobil Corporationmore info


 - Petrovietnam, Exxon Mobil Sign Deal On Gas Generation (Jan 13)
 - ExxonMobil Strikes More Oil Offshore Guyana (Jan 12)
 - Tillerson Tells Congress Neither He, Nor Exxon Lobbied Against Sanctions (Jan 11)
 Company: Total S.A.more info
 - Total's Uganda Expansion 'Significantly De-risks' Project Sanction (Jan 10)
 - Nigerian Oil Labour Union Suspends Strike At Total's Fuel Depots (Jan 6)
 - Total, Shell, Eni Eligible to Bid for New Iran Oil, Gas Projects (Jan 3)
 Company: ConocoPhillipsmore info


 - Startup Of Malikai Oil Field To Boost Malaysia's Kimanis Exports (Dec 13)
 - US Shale Firms Go Back To Work Buoyed By OPEC Deal, Trump Victory (Nov 14)
 - ConocoPhillips Aims To Sell Up To $8 Billion In Gas Assets (Nov 10)
 Company: Marathon Oil Companymore info


 - RoyalGate to Drill New Well in Equatorial Guinea's Block Z (Sep 25)
 - ShaMaran Subsidiary to Contest TAQA Default Notice (Sep 21)
 - Marathon, OMV Hand Back Croatia Oil Exploration Licences (Jul 29)
 Company: Chevron Corporationmore info
 - Argentina Clinches Deal to Attract Investment in Vaca Muerta Shale (Jan 11)
 - Oil, Gas Conflicts throughout Africa in 2016 (Jan 4)
 - SOCAR, AIOC Agree to Develop ACG Field (Dec 23)
For More Information on the Offshore Rig Fleet:
RigLogix can provide the information that you need about the offshore rig fleet, whether you need utilization and industry trends or detailed reports on future rig contracts. Subscribing to RigLogix will allow you to access dozens of prebuilt reports and build your own custom reports using hundreds of available data columns. For more information about a RigLogix subscription, visit www.riglogix.com.
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE


Most Popular Articles


From the Career Center
Jobs that may interest you
Case Specialist II Job
Expertise: Business Analyst|Legal|Regulatory Compliance
Location: Denver, CO
 
Senior Compliance Specialist
Expertise: Regulatory Compliance
Location: Kennesaw, GA
 
Compliance Technician
Expertise: Regulatory Compliance
Location: Dilley, TX
 
search for more jobs

Brent Crude Oil : $55.45/BBL 0.99%
Light Crude Oil : $52.37/BBL 1.20%
Natural Gas : $3.42/MMBtu 0.88%
Updated in last 24 hours