US Interior Department Considers 'Variable' O&G Royalty Rates
According to Reuters, the Obama administration is mulling "variable" royalty rates for drilling on federal lands that would reflect the difficulty of tapping oil and natural gas supplies.
Speaking at the Reuters Global Climate and Alternative Energy Summit, U.S. Interior Secretary Ken Salazar said that the Interior Department intends to issue proposals by the end of the year to update the royalty rates and ensure that oil companies pay reasonable rates as oil prices rise.
"We are taking a look at that ["variable" royalty rates] to see what makes sense in getting a fair return for taxpayers," Salazar is quoted as saying.
With this option, rates would be higher for lower-risk oil and gas fields, as well as when companies know in advance the reserves' estimated location. Conversely, the rates would be lower for higher-risk oil and gas exploration areas and exploratory drilling similar to "wildcatting", which may or may not result in a commercial discovery, Reuters noted.
Additionally, Salazar mentioned that the Interior Department is currently assessing the government's royalty-in-kind program, as well as a reorganization of the Minerals Management Service and Bureau of Land Management -- agencies that collect royalties and issue drilling leases, Reuters reported.
WHAT DO YOU THINK?
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.
- Obama Names New Head of MMS (Jun 15)
- Abbey Implements New Drilling Requirements (Jun 07)
- MMS Chief Resigns (May 27)
Company: U.S. Bureau of Land Management more info
- API Panel Member: Voluntary Methane Program Forthcoming (Oct 06)
- EnerVest Files Suit Over BLM Utah Permit Denial (Dec 15)
- Industry Groups Say Proposed Flaring Rules are Costly, Unnecessary (Jan 22)
Company: US Department of the Interior more info
- BOEM Plans Biggest GOM Lease Sale Ever (Oct 24)
- BSEE: About 20% US Gulf Oil Output Offline Due To Hurricane Nate (Oct 12)
- Trump Admin Plans To Delay Methane Controls From Oil, Gas (Oct 04)