As Congress considers whether to increase federal offshore drilling fees amid declining oil production, the Obama administration has released a report highlighting some important caveats in such a proposal.
The report, titled “Oil and Gas Inshore Specialty Basin Revenue,” notes that some fees would only apply to certain areas, which would effectively discriminate against users of federal lands like tribes or those used for agriculture.
But the biggest hit to the special revenue fund, according to the report, would come from the repeal of a fee levied on oil and gas drilling companies to help pay for improvements to onshore infrastructure.
Last month, the Energy and Natural Resources Committee of the House passed a proposal to raise the fees on offshore drilling companies. The legislation came as the Obama administration looks to increase federal off-shore drilling fees, especially to help pay for improvements to infrastructure.
That bill may face a tougher time in the Senate, where Republicans have questioned the Treasury Department’s proposal to put a ceiling on how much revenue could come from coastal states’ licensing fees, which could increase the number of licenses issued in states like Alaska and North Dakota. Those states are active onshore oil-production centers, but oil and gas production in these areas has fallen off.
In a statement, Interior Secretary Ryan Zinke reiterated that federal offshore drilling is needed, even though oil and gas production fell by more than 10 percent in the past two years.
“We have fundamentally shifted how we manage oil and gas in our national interest, while also ensuring the federal government remains a partner with the states and local communities where production takes place,” he said.