The U.S. Interior Department said on April 8 that one oil company had begun the process of requesting relief from royalty payments on its offshore production as the industry reels from slumping prices.

Lawmakers representing U.S. Gulf Coast states have asked Interior Secretary David Bernhardt to cut the royalty rate oil and gas companies must pay on their offshore drilling operations temporarily to counter the fallout of the coronavirus pandemic, which has reduced demand for fuel and crushed prices.

Department of Interior spokesman Nicholas Goodwin said the Bureau of Safety and Environmental Enforcement, which processes royalty relief requests for offshore drilling, had thus far received just one “pre-application letter.”

He did not name the company.

Bernhardt said the department would field requests from companies under established procedures, according to a lawmaker who met with him on April 7.

“He promised to quickly process targeted royalty relief on the outer continental shelf using existing law,” U.S. Senator Bill Cassidy of Louisiana said in a statement.

The economic fallout of the coronavirus outbreak combined with a price war between major oil producer nations Saudi Arabia and Russia has cut oil prices by more than half this year and threatened to tip some drillers into bankruptcy.

The U.S. Energy Information Administration said on April 8 oil output dropped 600,000 barrels per day (bbl/d) last week. Its longer-term projections show U.S. oil output averaging 11 million bbl/d in 2021, which correlates to about a 2 million bbl/d decline from the late 2019 peak.

Offshore