Losing O&G Royalties

[Irrelevant]

Report: BLM says oil and gas operators should set their own royalty rates for public lands drilling

State offices for the Bureau of Land Management (BLM) were instructed to allow oil and gas operators to set their own rates for royalties they pay to the government as part of their leases for publ…

thehill.com

Set your own tax? I mean WTF...

 

[VikingsGuy]

Ridiculous. If they were fixed fees (e.g., $4/barrel) then allowing an adjustment down during low price points could make some sense and is quite common in B2B royalty agreements. But since they are percentage based they already "float" up and down with the price. Maybe a tiered pricing to allow for adjustment during big swings (e.g., 12% default, 4% when below $30/barrel, 15% when above $70/barrel) would also make some sense in a B2B arrangement, but to drop to 0.5% and to let the payer decide is bizarre.

 

[Big Fin]

Given much of that royalty goes to state and local governments, the BLM leadership is writing rebate checks to the O&G industry that is drawn on state and local government funds. Wasn't their some popular meme about "spending the other person's money?"

Wish I could say I was surprised. The selective manner by which welfare/socialism chips are doled out to "friends of friends" is hard to comprehend.

 

[Ben Lamb]

I'm shocked that the O&G lobbyist currently inhabiting the Secretary of the Interior's office is approving this.

Absolutely shocked.

 

[Ben Lamb]

Meanwhile, this is what happens when you try to upload comments to the BLM's e-planning website. This was yesterday, May 21st. Comments were due on the Draft SEIS' on Sage Grouse. Those plans encompass around 40-50 million acres of public land that are currently being given away to O&G companies for pennies on dollar in terms of lease price, and now they get to decide what to pay America for the O&G they produce.

Getting pretty tired of this winning.

 

[hank4elk]

I'm surprized BLM rigs don't just sport Halliburton on the door.

 

[Mako]

Ridiculous. I'm not sure how it works if they are extracting oil or gas on BLM land, but if they're going to be given a big break like that, I hope there is a mandate requiring them to maintain the land.

 

[Bluffgruff]

When I tell people what Bernhardt used to do, people who love public lands, whether hunters or not, they really raise their eyebrows, and often can't even formulate a thought other than disbelief that ANYone would appoint HIM to THAT office. The conflict of interest is almost too large to comprehend.

 

[Trial153]

WTF? Can it get any more blatant

 

[Irrelevant]

WTF? Can it get any more blatant

Don't temp 'em, they're likely to say, "hold my beer"

 

[Trial153]

Don't temp 'em, they're likely to say, "hold my beer"

Halfway socialist, only socialize the loss.

 

[kwyeewyk]

And the Great American Outdoors Act is supposed to allocate half of funds from O&G to deferred maintenance, distract us with one hand while they rob us with the other.

 

[Deleted member 28227]

Interesting... personally I think the entire federal leasing program is a joke, royalty rates/lease terms/ bonus payments etc are all wildly below market value. The BLM might get $500 an acre, 12.5% for a 10 year lease on 10,000 acres that can be held with one producing vertical well while a neighboring landowner gets $5000 an acre 2 year lease, only for one formation, and with max pooling of 1000 acres meaning that an operator has to drill 10 wells in 2 years to hold the lease or otherwise renegotiate and pay additional bonus payments or give up the lease.

All that being said part of me wonders if this specific measure is driven by the BLM not wanting operators to shut in all their wells due to current market conditions.

Regardless, production and drilling has taken a massive hit and tax revenues are going to be down across the board.

It’s going to be a rough couple of years for states in the oil patch.

 

[kwyeewyk]

All that being said part of me wonders if this specific measure is driven by the BLM not wanting operators to shut in all their wells due to current market conditions.

You're probably on to something with this, all things considered the government isn't a business, and it's often the case that things are done to prop up industry. I guess that's not always a bad thing, when it seems fair, just usually doesn't seem fair.