Salazar’s Policy Contradicts Interior’s Report on Royalty Rates

Salazar’s Policy Contradicts Interior’s Report on Royalty Rates

Yesterday, Independent Petroleum Association of America (IPAA) Vice President of Federal Resources & Political Affairs Dan Naatz sent a letter to U.S. Department of Interior (DOI) Secretary Ken Salazar on the recent DOI report entitled “Comparative Assessment of the Federal Oil and Gas Fiscal System” which connects increased royalty rates on oil and natural gas production with suppressed government revenues.

Naatz urged Secretary Salazar, ahead of his testimony today at the House Energy and Natural Resources Committee, to reconsider his intention to raise the royalty rate on American producers operating on federal lands:

“Given the information included in the royalty report and the consistent concerns independent producers have raised with the Department of Interior regarding possible royalty rate increases, IPAA urges you not to raise the royalty rates for onshore and offshore production on federal lands. As your own report suggests, increasing the royalty rate on American producers is both counterproductive and misguided.

“As you know, the study indicates that ‘the wide ranges of government take between 53 percent for profitable projects to 86 percent for marginal ones in the deepwater Gulf of Mexico (GOM) suggest a highly regressive fiscal system that penalizes marginal fields.’

“America’s natural gas and oil producers are proud to provide one of the largest revenue streams to the federal treasury through royalties from public lands. We know from operating our businesses, and now confirmed by this report, that increased royalties and other costs actually reduce investment and provide less revenue for America.’

‘We hope that you will take the necessary steps to support resource development in America and not take measures that are counterproductive to the President’s stated goal of increasing American made energy.”

To read the full letter, please click here

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Julia Bell