Feds update oil, gas royalty system for federal land

Feds update oil, gas royalty system for federal land

Federal officials updated three rules dealing with oil and gas royalty payments on Monday, a move they say will allow a more thorough accounting of fuel produced on federal land. 

The rules rewritten on Monday aim to update 25-year-old accounting practices governing royalty rates for oil and gas drillers on federal and Indian land. The rules establish minimum standards for the measurement of oil and gas and deal with how companies report production to the federal government in order to account for theft and loss.


Bureau of Land Management officials aimed to updated the standards after government watchdogs raised concerns about how the BLM was measuring fossil fuel production on federal lands. 

Updating the the standards, the BLM said in a statement, will ensure oil and gas production is accurately measured and that the government receives the proper royalty payments for that production.

“These new rules provide a strong foundation for our oil and gas program that will ensure we are meeting our obligation to the American people and to the tribes we work with,” BLM Director Neil Kornze said in a statement. 

“These new rules also give the BLM the tools to be responsive to new technology — this change is particularly important because changing technology often provides opportunities to make oilfield operations safer and more efficient.” 

The agency said its finalized rules will cost drillers $100 million less on one-time compliance costs than earlier proposed versions. Annual compliance costs are $32 million lower, and the agency predicts individual operators will spend only about $12,856 on compliance annually during the first three years of the rule. 

Even so, the oil industry came out against the updated rules on Monday, saying the cost estimates are inaccurate. 

“We are ... displeased that three BLM regulations are, in essence, going into effect at the exact same time,” said Dan Naatz, the senior vice president of government relations and political affairs at the Independent Petroleum Association of America. 

“We believe the collective costs that these three regulations will impose on America’s small businesses and job-creators have not accurately been taken into consideration.”