Oil and gas leases on public lands up 20 percent in 2011, feds say

01 11, 2012 by Fuel Fux

Oil and gas lease sales on public lands grew 20 percent in 2011, a top official said today, as the Interior Department plans more sales in 2012 and mulls whether to boost the royalty rate.

In 32 lease sales, the Bureau of Land Management brought in $256 million on sales of 1,296 parcels of land, up from $213 million in 2010 on sales of 1,090 parcels, the Interior Department said. Deputy Interior Secretary David Hayes told reporters the numbers for 2011 include a lease sale in the Strategic Petroleum Reserve-Alaska in December.

BLM has scheduled 32 additional lease sales on U.S. public lands in 2012, according to the agency.

“We intend to continue to build on that success [from 2011] this year,” Hayes said at a Platts Energy Podium event.

The department will “soon” propose a rule that could increase the 12.5 percent royalty rate for onshore oil and gas leases on public lands, Hayes said. He declined elaborate on the timetable or what the proposed rule will contain.

A report by the Government Accountability Office, the government watchdog agency housed in Congress, has said the federal government’s royalty rate is less than what states and and private land owners get paid, Hayes said.

“It is not a trivial exercise to identify what particular royalty rates might make sense,” Hayes said. “Our intent is to make sure the American taxpayer is getting appropriate value for oil and gas development on our public lands.”

The announcement also comes as the Interior Department finishes writing rules that the department says would require disclosure of fluids used on public lands for hydraulic fracturing, the controversial process used to free up trapped oil and gas from shale-rock formations.

Kathleen Sgamma, vice president of government and public affairs at the Western Energy Alliance, an industry group, said she welcomed the lease sales increase from “historically low” levels in 2010. Although reforms by Obama Interior Department have reduced protests of lease sales, they remain unacceptably high, especially on Western federal lands, Sgamma said.

She blasted the possible royalty increase. “We believe the current rate reflects the added cost government imposes on federal-lands development” with time-consuming bureaucratic reviews and regulations, Sgamma said.