U.S. Interior Committee Votes for Lowering Federal Offshore Oil and Gas Royalties

Photo: By donvictorio / Shutterstock

By Valerie Volcovici WASHINGTON, Feb 28 (Reuters) – A U.S. Department of the Interior committee voted on Wednesday to recommend to Secretary Ryan Zinke that the agency lower royalty rates for federal offshore oil and gas drilling to 12.5 percent from 18.75 percent through 2024, to spur more production.

The agency’s royalty policy committee, consisting of department officials, state and tribal officials and energy companies, voted unanimously to lower the rates, which were set during the administration of former President George W. Bush.

The panel also voted to increase the amount of acreage available for offshore oil and natural gas leasing in the outer continental shelf.

The committee met in Houston on Wednesday to discuss and vote on around a dozen recommendations aimed at updating some federal royalty rules guiding energy and mineral production on federal land and waters.

The panel also voted to approve a proposal letting coal companies that mine on federal land to set their own rates for coal used to calculate royalties.

The recommendation comes after Zinke last year halted an Obama administration rule that required coal companies to pay royalties on sales to the first unaffiliated customer, known as an arm‘s-length sale. This closed a loophole that let companies sell coal to its own subsidiaries or affiliates at deflated prices. (Reporting By Valerie Volcovici, Editing by Rosalba O’Brien and Susan Thomas)

(c) Copyright Thomson Reuters 2018.

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