Zinke Won’t Lower Offshore Drilling Royalty Rates Over Energy Company Objections

Chris White | Energy Reporter

The Interior Department refuses to lower royalty rates energy companies pay from profits, even as oil producers like ExxonMobil and Chevron recommended a dramatic reduction in fees.

DOI Secretary Ryan Zinke cited record energy growth and a strong economy for his decision to not lower the fees companies pay to drill on federally controlled waters. Zinke caught flak January 4 for opening the U.S. Outer Continental Shelf (OCS) to offshore oil and gas leasing.

“The pilot light of American energy has been re-lit by President [Donald] Trump, and the President’s energy dominance strategy is paying off,” Zinke said Tuesday in a statement explaining his decision. A department advisory panel recommended in February royalty rates for offshore drillers be cut by a third. The DOI had different plans.

“Right now, we can maintain higher royalties from our offshore waters without compromising the record production and record exports our nation is experiencing,” Zinke said. “The Administration is grateful for the Committee’s hard work on these significant energy issues.”

He bucked advice from the Royalty Policy Committee, which is comprised mostly of representatives from Chevron, ConocoPhillips and Shell, as well as advisers representing state governments, tribes and Interior officials.

But Democratic lawmakers balked at the recommendations. “This proposal would amount to a giveaway to some of the most profitable companies in the world and rob taxpayers of potentially billions of dollars of revenues over the life of the leases,” Democrats Rep. Raúl Grijalva of Arizona and Sen. Maria Cantwell of Washington wrote in a letter to the DOI in late February.

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