Secretary Zinkwe says he will not lower Offshore oil and gas royalty rates

WASHINGTON – Due to the success of President Donald J. Trump’s America-First energy strategy, U.S. Secretary of the Interior Ryan Zinke today announced that the Department of the Interior will not lower royalty rates for future offshore oil and gas lease sales at this time.

On February 28, the Royalty Policy Committee (RPC), re-chartered by Secretary Zinke in 2017, made its initial recommendations, including one to set a royalty rate of 12.5 percent on all Outer Continental Shelf (OCS) lease sales at all water depths through 2024.

Since then, an improving economy, federal tax reforms, higher energy prices, and greater regulatory certainty have led to positive market conditions, prompting Secretary Zinke’s determination to keep the royalty rate in 200 meters of water and deeper at 18.75 percent.

“The pilot light of American energy has been re-lit by President Trump, and the President’s energy dominance strategy is paying off,” said Secretary Zinke. “Right now, we can maintain higher royalties from our offshore waters without compromising the record production and record exports our nation is experiencing. The Administration is grateful for the Committee’s hard work on these significant energy issues.”

In addition to the recommendation for lower royalty rates, the RPC recommended that the Department update its studies on international onshore and offshore data that guide its decision-making, as well as study the comparable offshore producing nations of Guyana and Mexico, their royalty rates, total revenue, lease block sizes, and recent sales in particular.

“Today’s decision reflects the oil and gas industry’s improving market conditions for safe and responsible development of our abundant energy resources,” said Vincent DeVito, Royalty Policy Committee Chair. “The Committee will continue to study ways to improve our programs, including recommendations to improve market conditions for other forms of energy like coal and offshore wind.”

Last fall, the Department announced the current fiscal terms used for future offshore lease sales, taking into account market conditions and the need to ensure taxpayers receive fair market value for use of the OCS. These terms include a 12.5 percent royalty rate for leases in less than 200 meters of water depth, and a royalty rate of 18.75 percent for all other leases issued, beginning with the August 2017 lease sale. Analogous to the Federal Reserve System – when the market or other conditions dictate, the Department has the statutory authority to adjust royalty rates for upcoming sales in accordance with federal law.

The Outer Continental Shelf Lands Act grants the Secretary the authority to conduct lease sales on the OCS that “assure receipt of fair market value for the lands leased and the rights conveyed by the Federal Government.” Lessees pay bonuses, rentals, and royalties reflecting the value of the rights to explore and potentially develop and produce OCS oil and gas resources. These revenues are distributed to the Federal Treasury, state governments, Land and Water Conservation Fund, and the Historic Preservation Fund. The Department, through the Bureau of Ocean Energy Management, sets minimum bid levels, rental rates, and royalty rates by individual lease sale based on its assessment of market and resource conditions as the sale approaches.

The Southern Maryland Chronicle is a local, small business entrusted to provide factual, unbiased reporting to the Southern Maryland Community. While we look to local businesses for advertising, we hope to keep that cost as low as possible in order to attract even the smallest of local businesses and help them get out to the public. We must also be able to pay employees(part-time and full-time), along with equipment, and website related things. We never want to make the Chronicle a “pay-wall” style news site.

To that end, we are looking to the community to offer donations. Whether it’s a one-time donation or you set up a reoccurring monthly donation. It is all appreciated. All donations at this time will be going to furthering the Chronicle through hiring individuals that have the same goals of providing fair, and unbiased news to the community. For now, donations will be going to a business PayPal account I have set-up for the Southern Maryland Chronicle, KDC Designs. All business transactions currently occur within this PayPal account. If you have any questions regarding this you can email me at

Thank you for all of your support and I hope to continue bringing Southern Maryland the best news possible for a very long time. — David M. Higgins II

© 2019 The Southern Maryland Chronicle. All Rights Reserved. This website is not intended for users located within the European Economic Area.