US Govt Considers Increasing Onshore O&G Royalty Rate



The Obama Administration will decide later this year on whether to raise fees on the oil and gas industry as Congressional Democrats are circulating a proposal to increase the current royalty rate of 12.5% to 18.75% for onshore leases, Dow Jones reports.

Outlined in the House Natural Resources Committee's summary, the proposal would increase the current rate by 50%, the report said.

Congressional members are also suggesting to end the royalty-in-kind program (RIK), which provides the Government with the option of receiving production royalty payments either in value or in kind -- that is, in the form of oil or gas production.

The proposal is an initial step as the Interior Department takes a "comprehensive look" at royalty rates for oil and gas drilling, according to Dow Jones.

Interior Secretary Ken Salazar told reporters earlier this year that rate reductions were unlikely, saying, "I do not believe that we should be subsiding the oil and gas industry."
 



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