Earth Protect Blog

By Matthew Brown
The Associated Press

BILLINGS, MONT.» The Trump administration has awarded energy companies hundreds of breaks on payments for oil and gas extraction from U.S. lands and the Gulf of Mexico during the coronavirus pandemic, according to a government database and federal officials.

The temporary breaks on royalty and rental payments are intended to help companies with workforce problems or other issues after government-imposed shutdowns due to the pandemic caused fuel demand to plummet worldwide.

Critics argue the breaks on government fees are industry handouts that in some cases are benefiting companies with histories of environmental violations or past failures to pay royalties.

Prices for oil have rebounded in recent weeks, topping $39 a barrel for West Texas crude on Wednesday after dropping below $13 in late April. Industry representatives say a full recovery is still far off.

The administration has now approved at least 117 applications for royalty reductions on U.S. lands in three Western states, according to Department of Interior data analyzed by The Associated Press.

In the Gulf of Mexico, five companies were deemed eligible for royalty relief and 12 applications from those companies have been granted, according to Karla Marshall with the Interior Department’s Bureau of Safety and Environmental Enforcement. The agency refused to provide details on the sizes of the leases and the names of the companies involved.

AP reported in late May that the Trump administration had begun approving royalty relief requests. The value of the breaks will depend on how much oil and gas the companies extract.

Companies typically pay the government 12.5% royalty payments on revenues from oil or gas extracted from public lands. The administration has cut that rate, in some cases to as low as 0.5%, on leases in Utah, Wyoming and Colorado.

Oil and gas royalty fees nationwide totaled almost $3 billion last year. Half the money is distributed back to the states where the oil and gas was extracted.

Interior Department officials also have approved requests to suspend rental payments on at least 375 oil and gas leases totaling almost 320,000 acres. Rental fees bring in far less revenue than royalties — $1.50 per acre for the first five years of a lease and $2 per acre for every subsequent five years, according to the Interior Department.

An American Petroleum Institute spokesman said the industry group has not been involved in individual relief requests from companies.