U.S. to take close look at royalty rates

The federal government on Monday launched a global review of how much energy companies pay to extract oil and natural gas from public lands in a step that could lead to higher royalties for drilling on U.S. property. The survey is designed to help government officials decide whether current leasing policies provide what Interior Secretary Ken Salazar has repeatedly called “a fair return for the American taxpayer.” Currently, the federal government collects royalties of around 12.5 percent for onshore leases. That royalty rate is “the same ... fee that's been in place since 1920,” Salazar told a Senate committee in March. He noted that in some states, such is Texas, the rate is at least 20 percent. “There is room for economic analysis to make sure that we're getting it right here,” Salazar said. In announcing the worldwide royalty study, Bob Abbey, director of the Interior Department's Bureau of Land Management, said the survey “will provide some common-sense grounds for comparison as we evaluate our royalty rates and our oil and gas fiscal policies in the context of global markets.”...more