[Editor's note: This story was updated at 12:08 p.m. CT June 11.]
The Trump administration has approved 12 applications for reductions in royalty payments from offshore drilling companies reeling from reduced demand for fuel and battered prices, according to the agency that processes such requests.
In an email, Bureau of Safety and Environmental Enforcement (BSEE) spokesman Sandy Day said that since March 1, the agency has received initial requests for relief from seven companies, five of which were approved to proceed with formal applications.
The numbers show the slow response by drillers to use the federal government's legacy process to seek relief from the impacts of the novel coronavirus pandemic.
Of 13 formal applications filed so far, all but one has been approved. Those companies are now eligible for royalty reductions, which are reviewed on a monthly basis. Formal applications for relief may include one or several leases.
Offshore oil and gas drillers and lawmakers representing U.S. Gulf Coast states lobbied aggressively for broad cuts to the rate companies must pay on their operations. The department responded by saying it would only field requests on a case-by-case basis from individual companies under established procedures.
The process has been little-used in the past and criticized by the industry as onerous and lengthy.
BSEE said the formal applications were processed within three to seven business days, while the pre-applications took between one and 16 business days.
The current royalty rate on new offshore leases requires drillers to pay 18.75% on the value of oil produced in deep water, and 12.5% for shallow water. BSEE did not give details on the amount of cuts it had granted.
Recommended Reading
Electrification of Permian Faces a Problem: Not Enough Shock for the System
2024-11-21 - Permian Basin producers may have to wait years for Texas utilities to grow the grid.
US Grid Operator Faces New Complaint Over Power Supply Auction
2024-11-19 - PJM Interconnection, the largest U.S. grid operator, is being accused of unfairly awarding high payments to power plants and pushing up electricity costs for homes and businesses.
Liberty Energy Plans Succession Following Trump’s Pick for Energy Secretary
2024-11-18 - If the U.S. Senate confirms President-elect Donald Trump’s choice of Liberty Energy CEO Chris Wright for the role of energy secretary, the company has a succession plan in place.
Trump Picks Liberty Energy’s Chris Wright for US Energy Secretary
2024-11-16 - Frac pressure-pumping leader Chris Wright was part of a mid-1990s team that suggested a slickwater—rather than gel—frac to George Mitchell, leading to the U.S. shale-gas breakthrough.