House committee makes changes to increase US oil and coal production on federal land

This week, a House of Representatives committee will examine sweeping changes in the nation's drilling programs for oil and gas, including the requirement of dozens of leases sales in the Gulf of Mexico, Alaska and other areas. These changes could be included in upcoming budget bills.

Why it Matters

The proposal is intended to support President Donald Trump's desire to increase U.S. production of fossil fuels by making it cheaper and easier to drill for oil, gas and coal on federally owned lands and water.

What's Next?

The House Natural Resources Committee is holding a markup on the energy provisions of the budget reconciliation bill. This will take place on Tuesday. The hearing is a key step before legislation can advance to the Republican-controlled House floor for a vote.

Later this year, the reconciliation process will enable Republicans to bypass Democratic opposition in order to pass tax-cut legislation on a party-line basis.

KEY QUOTE

The Republican staff of the House Committee on Natural Resources said, in a memo from May 4, that they were responding to President Trump's request to unleash American dominance in energy through commonsense and science-based provisions in budget reconciliation.

By the Numbers

The proposal announced last week would require 30 oil and natural gas lease sales to be made in the Gulf of Mexico (which President Donald Trump renamed as the Gulf of America) over a period of 15 years. This provision would replace the schedule that the Interior Department has been developing every five years over the past decades.

In the next decade it would be necessary to hold six offshore auctions at Alaska's Cook Inlet, four onshore auctions at the Arctic National Wildlife Refuge and lease sales every two years in Alaska's National Petroleum Reserve.

The state would also share revenue with the federal governments before 2035.

In recent years the United States only held a few lease sales in Alaska, mostly due to a lack of interest from industry.

According to the staff memo, the proposed changes would result in $15 billion of savings and revenue for the federal Government. This is mainly due to the leasing of onshore oil and natural gas. The legislation would lower the royalty rates for both onshore and offshore drillers to 12,5%.

REACTION

A senior executive in the oil industry told us that the House oil provisions will remain largely intact in the final legislation due to the strong support the oil sector has in Congress. However, some provisions may face legal challenges.

Jenny Rowland Shea, director of Public Lands at the liberal think-tank Center for American Progress said that the bill would "upend the use and management of our public land as we know it by putting the oil and mining industry's donors in charge." Reporting by Nichola Grahn in San Marino, California; Jarrett Renshaw from Washington; Editing by Edward Tobin

(source: Reuters)