A group of independent producers have fired off a letter to Interior Secretary Ken Salazar challenging and contesting recent claims by the Obama administration involving oil and natural gas production on public lands.

Last week “you [Salazar] were quoted at the White House as saying ‘the fact of the matter is we are producing more from public lands — both oil and gas, both onshore as well as offshore — than any time in recent memory.’ We are confused by these statements because the most recent data we have seen from DOI [Department of Interior] indicates that both oil and natural gas production on federal lands declined over last year,” wrote Dan Naatz, vice president of federal resources for the Independent Petroleum Association of America (IPAA).

He pointed out that Bob Abbey, director of Interior’s Bureau of Land Management (BLM), told a Senate Appropriations Committee hearing that “oil production on onshore federal lands was down and that the ‘statistics speak for themselves.'”

Naatz said the IPAA also was troubled by the Obama administration’s efforts to impose additional inspection fees, raise fees on applications for permits to drilling, and increase the onshore royalty rate on oil and gas produced on federal land to 18.75% from its current 12.50%. Abbey said last week that the BLM has yet to make a final decision about raising the onshore royalty rate.

“Although the president talks about increasing American energy production, the cumulative impact of these fee and royalty increases are bound to have the opposite impact. In fact, a recent report commissioned by DOE and completed by IHS-CERA showed that an increase in royalty rates will…suppress development and greatly reduce the bonus bids and revenues that our nation receives annually from production,” Naatz said (see Daily GPI, March 19).

In the letter, the IPAA also took issue with Abbey’s comment that small oil and gas operators are the highest risk to the environment of public lands. “The highest risk we have is with small operators. They do not have the capital to do everything that is required to ensure environmental protections for the drilling that is occurring,” he said on Capitol Hill.

Naatz called the statement “offensive” to independent oil and gas producers. “The roughly 6,000 members of IPAA, who drill 95% of the nation’s oil and natural gas wells, are proud of their record regarding environmental protection and compliance with all of the pertinent federal regulations governing oil and natural gas production.

“We would be interested if Director Abbey would share the data regarding the higher risks small operators pose to the environment when they conduct their operations. If, in fact, real issues exist, IPAA believes the industry should be working with BLM to address them and stands ready to do so,” he said.

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