BLM, MMS to review federal oil, gas royalty regime

The two US Department of the Interior agencies that handle federal oil and gas leasing will jointly review federal royalty policies, their directors announced.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Apr. 13 -- The two US Department of the Interior agencies that handle federal oil and gas leasing will jointly review federal royalty policies, their directors announced. The study conducted by the Bureau of Land Management and the Minerals Management Service will examine other countries’ fiscal systems and compare them with those in the US, BLM and MMS said Apr. 12.

The study is a response to a 2008 Government Accountability Office report that suggested returns from federal oil and gas leases are lower than what other countries receive, MMS Director S. Elizabeth Birnbaum said. “We need to consider international comparisons in selecting fiscal parameters for our leases,” she explained.

BLM Director Robert V. Abbey added, “We are assessing the federal oil and gas fiscal systems because the department does not routinely monitor fiscal systems in other countries. This study will provide some common-sense grounds for comparison as we evaluate our royalty rates and our oil and gas fiscal policies in the context of global markets.”

They said the study will explain the methods and appropriate uses of international comparisons, collect data and construct consistent comparisons, and apply that information to current federal lease term issues. Comparison of the US government’s return with that of other countries may reveal a potential for greater revenues, they suggested.

The study’s final report should be completed 9 months after the contract is awarded, Birnbaum and Abbey said.

Contact Nick Snow at nicks@pennwell.com.

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