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Interior Department to resume oil and gas leasing, charge higher fees
Posted on 4/15/22 at 5:45 pm
Posted on 4/15/22 at 5:45 pm
quote:
As pressure increases on the Biden administration to lower the price of fuel, the Interior Department announced on Friday plans to hold its first onshore oil and gas lease sales since President Biden took office.
The department said it plans open roughly 144,000 acres up for lease next week and will charge oil and gas companies higher royalties to drill on federal land, raising the fees for the first time. Under the plans unveiled Friday, royalty rates would increase to 18.75 percent from 12.5 percent for oil and gas lease sales.
The long-awaited announcement follows a report the department issued last fall, which called for royalty fees to be more in line with the higher rates charged by most private landowners and major oil- and gas-producing states.
The Biden administration’s willingness to move forward with oil and gas leasing angered climate activists, who called the department’s plans a betrayal of the president’s pledge to ban new drilling on public lands.
quote:
“This is pure climate denial,” Jeremy Nichols, climate and energy program director for WildEarth Guardians, said in a statement. “While the Biden administration talks a good talk on climate action, the reality is, they’re in bed with the oil and gas industry.”
Interior officials portrayed the pending lease sales as a significantly scaled-back version of what might have been, describing it as a pragmatic approach. In a news release, they noted that the acreage offered for auction is 80 percent less than the 733,000 acres of land in nine states that oil and gas companies had nominated.
“For too long, the federal oil and gas leasing programs have prioritized the wants of extractive industries above local communities, the natural environment, the impact on our air and water, the needs of Tribal Nations, and, moreover, other uses of our shared public lands,” said Secretary Deb Haaland. “Today, we begin to reset how and what we consider to be the highest and best use of Americans’ resources for the benefit of all current and future generations.”
The department’s plans are the latest example of the political tightrope the president is trying to walk.
quote:
As a presidential candidate, Biden vowed to ban new oil and gas drilling on federal lands. But in January of 2021, U.S. District Judge Terry A. Doughty in Louisiana struck down the executive order temporarily suspending drilling, dealing a major blow to the president’s plans to cut greenhouse gas emissions from fossil fuels. The authority to suspend oil and gas leasing lies “solely with Congress,” Doughty wrote.
LINK /
A few takeaways for me here:
1- The DOI/BLM should have raised those royalty rates several years ago. 18.75% in the Permian and Powder River is still a no-brainer for operators to go after. You don't want the government trying to gouge operators to discourage development of minerals, but when operators are drilling on private and state lands at 20-25% royalty, to be accepting half of that is bad management of public lands.
2- There has to be interesting conversations being had amongst the real brain trust within the White House. They already know Democrats are going to lose ground in the midterms, and extremely high gas prices (which also will affect grocery store prices) will lead to a slaughter. There's a reason the Biden Department of Interior approved Federal Drill Permits at a higher rate last year than even during three out of four of Trump's years. They know we need the production, and they know the Federal Government needs the revenue to subsidize all the national parks that lose money every year. But now his enviro-commie base has caught on to the "don't watch what I'm really doing" games, so Democrats have to choose.
3- The Secretary of the Department of Interior is extremely anti-oil & gas, yet her state would go completely bankrupt if it wasn't for oil & gas production and the tax generated benefits of that activity in Eddy, Lea, Roosevelt and Chavez Counties. The K-12 schools in New Mexico would crumble without oil & gas activity on State-owned lands.
This post was edited on 4/15/22 at 5:51 pm
Posted on 4/15/22 at 5:55 pm to ragincajun03
“rates charged by most private landowners and major oil- and gas-producing states. “
Any landmen want to comment on what has happened in the private lease domain in last 15 years?I think it has increased a fair amount also?
Any landmen want to comment on what has happened in the private lease domain in last 15 years?I think it has increased a fair amount also?
Posted on 4/15/22 at 5:55 pm to ragincajun03
quote:Correct. It's preposterous it was only 13% at this late date.
- The DOI/BLM should have raised those royalty rates several years ago. 18.75% in the Permian and Powder River is still a no-brainer for operators to go after. You don't want the government trying to gouge operators to discourage development of minerals, but when operators are drilling on private and state lands at 20-25% royalty, to be accepting half of that is bad management of public lands.
quote:Nah. Federal production just isn't very big - and the NP budget is a drop in the bucket.
They know we need the production, and they know the Federal Government needs the revenue to subsidize all the national parks that lose money every year.
Posted on 4/15/22 at 6:01 pm to Big Scrub TX
The revenues brought in by the BLM offices in heavy oil & gas producing areas are redistributed to other BLM offices. To the extent many of the offices in the O&G revenue generating offices are left very understaffed.
Posted on 4/15/22 at 6:11 pm to Big Scrub TX
It’s not like oil companies can just turn the spicket on or off. When oil fell below $40 a barrel, companies started closing wells. It takes time and alot of effort to reopen one. A big problem right now is labor. Not every Joe off the street can work a rig and the labor market is already tight, so you have to pay more. Now you have to convince investors that the price spike isn’t a blip and increased cost of labor, diesel fuel to run the rigs, increased transport costs of oil, etc. isn’t going to eat all potential profits. The banks and Wall Street so far aren’t buying it. Right now, it is what it is and Biden really doesn’t have much control over it.
Posted on 4/15/22 at 6:13 pm to ragincajun03
They know they can't raise taxes on O & G, so this is the next best thing.
So, the government will make even more money off a gallon of gas than the evil oil companies will.
So, the government will make even more money off a gallon of gas than the evil oil companies will.
This post was edited on 4/15/22 at 6:16 pm
Posted on 4/15/22 at 6:17 pm to Thecoz
quote:
Any landmen want to comment on what has happened in the private lease domain in last 15 years?I think it has increased a fair amount also?
The Haynesville was a game changer, but resource plays are a different animal than lenticular reservoirs.
Posted on 4/15/22 at 6:20 pm to Strannix
This administration is so incompetent it’s amazing
Posted on 4/15/22 at 6:21 pm to robbykidd
quote:
A big problem right now is labor. Not every Joe off the street can work a rig and the labor market is already tight, so you have to pay more.
Also safety issues since alot of experience retired or got out the industry in 2020. Greener labor coming in, many willing and able, but it's an HSE nightmare.
Posted on 4/15/22 at 6:27 pm to ragincajun03
quote:
“This is pure climate denial,”
"Climate Denial" is a meaningless phrase.
Posted on 4/15/22 at 6:40 pm to Jack Carter
Gotta lower them gas prices back to the "reasonable" rates of $3.23/gal before the midterms.
Posted on 4/15/22 at 6:41 pm to ragincajun03
O&G may buy up some leases for the day that America First folk hold the reins of governmental power, but they know that real money investment is a crapshoot. And that is assuming they even get permits which enable production.
Either the Left is kicked out of power or we continue toward dysfunction and collapse. Of course, there is always a chance that high tech innovation with UFO like stuff we can hardly imagine, changes the whole dynamic. And even if we acquired said tech, we'd probably militarize it and commit suicide. This is like switching the chairs on the Titanic.
Either the Left is kicked out of power or we continue toward dysfunction and collapse. Of course, there is always a chance that high tech innovation with UFO like stuff we can hardly imagine, changes the whole dynamic. And even if we acquired said tech, we'd probably militarize it and commit suicide. This is like switching the chairs on the Titanic.
Posted on 4/15/22 at 6:43 pm to ragincajun03
And these assholes blame the oil companies for high prices!
Screw these creepy fricks!
Screw these creepy fricks!
Posted on 4/15/22 at 7:28 pm to oldskule
That ship has sailed on a lot of private investment, those big oil boys making bank in places like Guyana, and just piling on the cash as they look at the knee jerk reactions of this administration in the domestic market.
They have an annual budget and hate, no despise uncertainty of govt on top of the risk associated with ROI of projects.
But who am I to judge, the same policies worked wonders at driving all manufacturing out of the US.
They have an annual budget and hate, no despise uncertainty of govt on top of the risk associated with ROI of projects.
But who am I to judge, the same policies worked wonders at driving all manufacturing out of the US.
Posted on 4/15/22 at 8:17 pm to ragincajun03
quote:
to hold its first onshore oil and gas lease sales since President Biden took office.
What about offshore? They still
Gonna hold off on that shite? Because barrels in the Gulf of Mexico are the lowest carbon barrels in the world. If they really cared about the environment that would be paying to have companies drill offshore.
Posted on 4/15/22 at 11:15 pm to waiting4saturday
BINGO. You nailed it here, I work in offshore and onshore O&G. US GOM production accounts for roughly 40-50% of total US production.
Posted on 4/15/22 at 11:31 pm to ragincajun03
Keep in mind required infrastructure to remove the O&G from the area.
State and private lands are likely to be more accessible than federal lands, especially considering federal lands make up much of the western US.
Royalty rates may make the difference between buying a lease you can produce on and buying one then deciding it isn’t worth the effort.
State and private lands are likely to be more accessible than federal lands, especially considering federal lands make up much of the western US.
Royalty rates may make the difference between buying a lease you can produce on and buying one then deciding it isn’t worth the effort.
Posted on 4/16/22 at 7:02 am to ragincajun03
quote:
“For too long, the federal oil and gas leasing programs have prioritized the wants of extractive industries above local communities,
The only reason the 'extractive industry' exist is due to the wants of the public.
Posted on 4/16/22 at 7:20 am to Thecoz
All I know is when I do not get a healthy lease bonus plus 25% royalty on gross sale, I get a real healthy 65% plus royalty on gross sale once the well is completed.
Either you get a little money up front and a 1/4 royalty on gross sale or you can get right at 3 times royalty on gross sale.
No brainer!! Been doing this a long time. The landmen show me their lease then I show them mine.
Either you get a little money up front and a 1/4 royalty on gross sale or you can get right at 3 times royalty on gross sale.
No brainer!! Been doing this a long time. The landmen show me their lease then I show them mine.
This post was edited on 4/16/22 at 7:25 am
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