US House Democrat Seeks New Fees for Nonproducing Oil Leases

WASHINGTON (Dow Jones Newswires), March 3, 2011

The top Democrat on the U.S. House Natural Resources Committee will introduce a bill Thursday that imposes new fees on energy companies for failing to produce oil and gas on federal lands they lease.

Rep. Ed Markey, a Democrat from Massachusetts, said charging fees on such nonproducing leases will "encourage energy companies to produce more oil and gas and increase the revenue collected by the federal government."

In 2010, the U.S. Bureau of Land Management issued 4,090 permits to drill and companies launched operations on only 1,480 of those permits, Markey said.

Markey didn't say what level of fees he will propose.

The Obama administration proposed similar fees earlier this year when it released its budget for 2012. It was part of a handful of measures aimed at collecting more revenue from the oil and gas industry, including the repeal of billions of dollars in tax breaks.

During an appearance before the House Natural Resources Committee Thursday, Interior Secretary Ken Salazar said oil and gas companies are producing on less than one-third of the areas they lease.

Of the 41.2 million acres of onshore federal lands being leased by oil and gas companies, only 12.2 million acres are producing, Salazar said. Of the 38 million acres of offshore lands being leased, only 6.3 million acres are producing.

Efforts by Democrats to impose fees on nonproducing leases take place at a time when oil and gas companies are seeking access to additional offshore areas that are currently not available for drilling.

"It's as if the oil and gas industry first asked for dessert, then ate one-fourth of their dinner and then complained to the manager about the service," Markey said Thursday during a hearing of the Natural Resources Committee.

Salazar said the Interior Department "would be happy" to help Markey develop the legislation.

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