API Group Director of Upstream and Industry Operations Erik Milito criticised a plan by the Department of Interior to raise onshore oil and natural gas royalty rates by 50% at the same time President Obama has called for more domestic production:
‘At a time when the Administration has called for an all of the above energy approach as a means for securing our energy future, it is moving forward with another policy decision that will do just the opposite. Increasing royalty rates when the industry already contributes US$ 86 million to the federal government every day will only create disincentives for the domestic production President Obama claims to support. While the president says he wants more domestic oil and natural gas production and the new jobs and government revenues that go along with it, his administration blocks new development at every turn. The contradiction is clear.’
‘The oil and natural gas industry is one of the few bright spots in the economy, creating hundreds of thousands of jobs even when others are laying people off. The US has some of the largest known resources of oil and natural gas in the world, but the administration continues to pursue policies that will slow development, reduce revenues to the government over times, destroy jobs and undermine our energy security.’
The administration’s actions have already led to decreased production on federal lands. A permitting and leasing slowdown on deferral lands in western states has decreased production, cost jobs and left millions in federal and state tax revenues, royalties and lease payments on the table, according to a study by EIS Solutions. This study shows that investment and job creation are moving full speed ahead on private and state lands, while the government continues to serve as a drag to development on federal lands.
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/20022012/api-on-oil-and-gas-royalty-rates/