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Interior Says Royalties on Federal Lands Down $3.5 Billion

The Interior Department said "substantially lower oil and gas prices" impacted royalties from energy production on federal and Indian lands and offshore areas in 2015, resulting in a decline of more than $3.5 billion to states, Indian tribes, the Treasury Department and others.

Interior's Office of Natural Resources Revenue (ONRR) said it dispersed $9.87 billion for fiscal year (FY) 2015, down $3.53 billion from the $13.4 billion awarded in FY 2014. The agency put the blame for the shortfall squarely on commodity prices, citing a 43% decline in the average price of oil between FY 2014 ($99.07/bbl) and FY 2015 ($56.54/bbl), and a 28% decline in average natural gas prices in FY 2015.

ONRR said approximately $1.84 billion was disbursed to 37 states for their share of revenue collected from energy production on federal lands within their borders, and from offshore oil and gas production within federal waters adjacent to their shores. Wyoming was the top recipient with $886 million, and New Mexico ($496 million), Colorado ($123.9 million), Utah ($116.4 million) and California ($64.3 million) rounded out the top five.

Other states that received revenues in double-digit millions were North Dakota ($47.2 million), Montana ($34 million), Alaska ($18.2 million) and Louisiana ($14.5 million). The smallest payment, $110, went to North Carolina.

The state disbursements included $2.44 million to four Gulf Coast states -- Alabama, Louisiana, Mississippi and Texas -- and their eligible counties and parishes under the provisions of the Gulf of Mexico Energy Security Act (GOMESA), a 2006 law that awards them 37.5% of oil and gas qualified leasing revenues from certain Outer Continental Shelf areas (see Daily GPIMarch 24, 2009).

Thirty-four American Indian tribes recognized by the federal government and nearly 36,000 individual Indian mineral owners received $852.7 million, ONRR said. The revenues are disbursed through Interior's Bureau of Indian Affairs and the Office of Special Trustee for American Indians.

Others receiving revenue include three federal programs: the Reclamation Fund ($1.4 billion), the Land and Water Conservation Fund ($888.6 million), and the Historic Preservation Fund ($150 million). The remaining $4.7 billion was given to the Treasury.

"These revenues remain a critical source of non-tax funding...," said ONRR Director Greg Gould. "Derived from conventional domestic energy production as well as renewable energy sources, these revenues help meet a variety of local needs, ranging from school funding to infrastructure improvements and water conservation projects."

Last April, Interior began taking public comments over a proposal to empower its Bureau of Land Management (BLM) to adjust royalty rates for drilling on public lands (see Daily GPIApril 17). One month later, Interior finalized its Indian Oil Valuation Amendments, which expand and clarify a major component of tribal oil and natural gas leases pertaining to how royalty payments are calculated (see Daily GPIMay 6).

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