Grijalva Calls Out Weak Offshore Lease Sale, Asks Interior to Keep Royalty Rates Stable

Washington, D.C. – Due to the underwhelming response by the oil and gas industry to the recent Department of the Interior (DOI) Gulf of Mexico offshore oil and gas lease sale, Ranking Member Raúl M. Grijalva (D-Ariz.) sent a letter to Interior Secretary Ryan Zinke today to call him out for pushing forward energy policies that are harmful to the environment and economy. Grijalva is requesting additional information on DOI budget priorities and is asking that the recent weak lease sales not be used as an excuse to provide a windfall for industry in the form of lower offshore royalty rates.

Last week’s offshore lease sale is the second consecutive time Secretary Zinke has tried to sell off huge parts of our oceans to big corporate polluters, only to see significantly less interest from the oil and gas industry than expected. Of the 77.3 million acres offered, only 815,403 acres, or roughly 1 percent of the those offered, attracted a bid. The average winning bid was only $153 an acre – 35 percent lower than the August 2017 Gulf lease sale and one of the lowest Gulf prices per acre over the last decade.

Secretary Zinke’s hand-picked, industry-stacked advisory board on royalty collection recently recommended that the industry should pay lower royalty rates on offshore oil and gas leases in order to make those leases more attractive, a potential windfall for the industry at the expense of American taxpayers. The letter points out that this is not the proper way to manage America’s natural resources:

If the oil and gas industry is prioritizing onshore development due to economics and exporting as much as 2 million barrels of oil a day due to existing record levels of production, we should not try to entice them to drill offshore with bargain-basement rates. The federal government should manage America’s natural resources for the long-term, not try to unload our oil and gas inventory as quickly as possible as if there was an “Everything Must Go” sign on our oceans.

The complete letter can be viewed here: http://bit.ly/2IUXyGO.

The Trump administration’s drill-everywhere agenda justifies cuts to DOI renewable energy programs by stating that the cuts are based on expected demand, but Secretary Zinke failed to provide any evidence for declining demand in his March 15 hearing before the Natural Resources Committee. In addition, despite continuing declines in demand for coal, the DOI budget proposal would nearly double the budget for the Bureau of Land Management coal program.

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