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U.S. oil drilling review proposes higher fees, development curbs

CommoditiesNov 26, 2021 09:55PM ET
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© Reuters. FILE PHOTO: U.S. Secretary of Interior Deb Haaland listens to a question during a hearing for a budget request for the Department of the Interior for 2022 to the Senate Committee on Energy and Natural Resources on Capitol Hill in Washington, U.S., July 27

By Jarrett Renshaw, Valerie Volcovici and Nichola Groom

(Reuters) -The Biden administration proposed a slew of changes on Friday to the nation's federal oil and gas leasing program, including hiking fees on drilling companies and limiting their access to sensitive wildlife and cultural zones.

The recommendations followed a months-long review aimed at ensuring drilling on federal lands and waters benefits the public. But in a sign of the extreme controversy surrounding the issue, environmental groups slammed the proposals as too weak and the industry criticized them as too harsh.

President Joe Biden's administration launched the review earlier this year in what had widely been seen as a step toward delivering on his election campaign promise to end new fossil fuel drilling on federal acreage to fight climate change.

Under the U.S. federal oil and gas leasing program, the Interior Department must hold regular auctions for the drilling industry to boost domestic energy self-sufficiency and raise money for public coffers.

The Interior Department report, however, said the current program "falls short of serving the public interest" and called for new rules to boost royalty rates, bonding rates, and other fees for producers. Current law requires a minimum royalty rate of 12.5% for oil and gas produced on federal acreage, a level that has not changed in about a century.

The report also proposed new rules to avoid leasing "that conflicts with recreation, wildlife habitat, conservation, and historical and cultural resources," it said.

"Our nation faces a profound climate crisis that is impacting every American," Interior Secretary Deb Haaland said in a statement announcing the recommendations.

"The Interior Department has an obligation to responsibly manage our public lands and waters – providing a fair return to the taxpayer and mitigating worsening climate impacts."

The American Petroleum Institute, which represents the U.S. oil and gas industry, criticized the proposals, saying they would heap costs on domestic energy producers at a time of already-high retail gasoline prices.

Environmental groups including the Center for Biological Diversity and Food & Water Watch, meanwhile, objected to the proposals as too weak.

"These trivial changes are nearly meaningless in the midst of this climate emergency, and they break Biden's campaign promise to stop new oil and gas leasing on public lands," said Randi Spivak, CBD's public lands director.

"Greenlighting more fossil fuel extraction, then pretending it's OK by nudging up royalty rates, is like rearranging deck chairs on the Titanic,” she said.

About a quarter of the nation's oil and gas comes from federal leases and the program raises billions of dollars for federal and state budgets.

LONG DELAYED REPORT

The Interior Department had meant for the leasing report to be released by early summer but repeatedly delayed it without explanation.

The department had also attempted to suspend oil and gas leasing during the program review, but was forced to move ahead with auctions after several oil and gas producing states sued in federal court.

A federal auction of millions of acres in the U.S. Gulf of Mexico this month, for example, generated more than $190 million in high bids, the highest since 2019, with major buyers including Exxon Mobil Corp (NYSE:XOM), Chevron Corp (NYSE:CVX), BP (NYSE:BP) Plc and Shell (LON:RDSa).

Haaland has said she wants to reduce the carbon footprint of the nation's federal lands and waters by encouraging leasing for renewable energy sources such as wind, solar and geothermal instead of fossil fuels.

Biden, meanwhile, has set a target to decarbonize the U.S. economy - the world's second-largest greenhouse gas emitter - by the year 2050, in part by encouraging a transition away from fossil fuels to renewables.

U.S. oil drilling review proposes higher fees, development curbs
 

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Comments (12)
Tyrone Jackson
Tyrone Jackson Nov 27, 2021 11:44AM ET
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You would think that the American President would help the American people. Biden killed the Keystone pipeline his first day. Higher energy prices all over the intire world. *****domestic drilling and bingo- gas is up 75% for most all Americans. It just kills the working poor. The rich are not bothered by 40 or 60 bucks more at fill up. But the poor liberals can’t even fill up a full tank. Haha even my liberal friends complain about it. Yet they voted for him. What losers
Ron Raymond
Ron Raymond Nov 27, 2021 11:44AM ET
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US is in big trouble with Bien/Harris as leaders. Imagine if there was a war, we would be doomed. They are the most stupid leaders in history.
taylor jason
taylor jason Nov 27, 2021 11:44AM ET
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meanwhile Warren and Biden are asking the FTC to investigate price gouging at oil/energy companies. it's amazing how they haven't made the connection that higher energy prices is the ultimate result of greater regulation
Deborah Perez
Deborah Perez Nov 27, 2021 8:32AM ET
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Tyranny
William Smith
William Smith Nov 26, 2021 11:25PM ET
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Biden doing his best to destroy America. Of course he had a great teacher in Obama.
Todd Gray
Todd Gray Nov 26, 2021 8:17PM ET
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Green liars! What's is the public's best interest is survival. What the fake greenies do, is have choice land set aside, and down the line build dandy homes on it for their wealthy buddies. Green is almost entirely a scam of the most sleazy generations this country has produced.
Trevor Roberts
LimitUp Nov 26, 2021 7:40PM ET
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Big tax on lower income households disguised as going after big oil
Todd Gray
Todd Gray Nov 26, 2021 2:57PM ET
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Biden will hose the little guy every time. You know why he let's the media say all the bad poop they get away with? He was the Senator for the little state where most media corporations are incorporated, and pay almost no state taxes. Even as president, he protects little Delaware's best interests over the entire country's.
Jo Pa
Jo Pa Nov 26, 2021 2:51PM ET
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Tyranny!
Kaveh Sun
Kaveh Sun Nov 26, 2021 2:07PM ET
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keep gas at Eu price will make all drive electric cars. This is part of the green plan.
Felipe Daniel
Felipe Daniel Nov 26, 2021 1:41PM ET
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Biden admin does not care about Americans
Roger Miller
Roger Miller Nov 26, 2021 1:16PM ET
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Good way to help keep gas prices high, US unemployment high, and to remain dependant on OPEC oil.
El Broker
El Broker Nov 26, 2021 1:03PM ET
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God help us ..the Elitist are clueless...
Mike Brarey
Mike Brarey Nov 26, 2021 12:39PM ET
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this will support oil prices
 
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