One often-overlooked benefit of the U.S. energy boom: The federal government receives billions of dollars in royalties annually. Thanks to property rights, so do millions of Americans. Over the past decade, for example, Cabot Oil & Gas Corp. has dished out $1 billion in royalties and $500 million in signing bonuses to Pennsylvania landowners in Susquehanna and Wyoming counties.

In fiscal 2016, Washington collected $3.9 billion in royalties from oil and gas production on federal land and offshore—and that’s down from $6.6 billion in 2015, according to a new report from the Government Accountability Office. Lower energy prices contributed to the decline, but so did the Obama administration’s roadblocks on drilling-permit applications.

The Congressional Research Service reports that federal lands produced 1.57 million barrels of crude oil a day in 2008. By 2015 that had risen 25% to 1.955 million. But over the same period production on nonfederal land more than doubled from 3.467 million barrels a day to 7.46 million.

The contrast was starker for natural gas. Federal lands produced 6,471 billion cubic feet in 2008, but that number shrank to 4,594 billion by 2015. Over the same period production on nonfederal lands grew from 14,523 billion cubic feet to 24,143 billion.

The difference is even more pronounced when you realize that the royalty rate is typically much higher on state and private land. Oil and gas producers are required to pay 12.5% to drill on federal land. Royalties on state land are usually in the range of 16% to 18%. In Texas, the largest producer, the typical rate is 25%. Royalties on private land often reflect the state rate.

Why would producers flock to state or private land rather than cheaper federal land? Because time is money. The Bureau of Land Management took an average of 307 days in 2011 to process applications for drilling permits. States can give approval within a few months. 

The National Association of Royalty Owners, a trade group, estimates that eight million to 12 million people receive royalties from oil and gas production nationwide. A 2013 studyby Timothy Fitzgerald and Randal Rucker, economists at Montana State University, estimated that in 2012 private owners earned some $22 billion in royalties. Production on private lands has since increased significantly. 

Mr. Fitzgerald and others estimated later that six major shale plays generated $39 billion in private royalties in 2014. Some will receive a small fortune, while others—me included, thanks to my grandfather, who left me some mineral rights—may earn enough for a dinner date every few months. 

But there’s hope for more. “So much of our land was closed to development,” President Trump observed in a recent energy speech. “We’re opening it up.” If he makes good on that promise, it will give the economy a major boost, along with millions of royalty owners.

Read more:

Views: 951

Reply to This

Replies to This Discussion

Your post confuses me a bit. It seems like you are advocating opening up public / federal owned lands to O&G drilling. However, that isn't a good thing for private land / mineral owners like myself. There is currently over production and that's causing the low prices, losing O&G companies as well as mineral owners a lot of money and slowing down drilling. I know most of the people on this site are here because they want their properties drilled, there is even less chance of drilling on our private lands should we open more public lands to drilling, and at cheaper rates as your post clearly states.

Leave public lands alone if the public doesn't want wells on it. At least until the private lands run dry and there is no choice. I DO want a well on my land and the O&G companies will be much less interested in that if they can get public lands cheaper. Am I missing something? 

I have wandered about that myself.not drilling on public lands including offshore would make a lot of people happy.thanks for comment.

Agreed! :-)

Your argument makes sense, however, the above article states that time is money and the federal permit approval process takes much longer than state approval for private land.  So even if we open up more public lands, unless Trump's Department of the Interior/BLM (I think that's who's in charge of those permits) does something to streamline that process, there will still probably be more drilling on private lands.  Just my two cents.

I see no reason to open up public lands right now, so the more roadblocks and delays with public lands the better. Utica shale states / towns would benefit a lot as I see it if they don't open up more pubic lands.

I think the biggest thing that would also help would be to see less imported oil, especially from middle east countries, we have enough oil and gas here to provide energy for a long time to come. We need to be pushing for that. Get us energy independent, from all the evidence we can easily do that with our reserves. Trump is blocking their people from coming here but not their oil. 

Yeah, I can agree with what you are saying.


Local Groups

Blog Posts

FERC to Constitution Pipeline: A Year Means A Year, You Shoulda Fought

Posted by Thomas J Shepstone on July 20, 2018 at 8:31am 0 Comments

Sadly, FERC has once again refused to help Constitution Pipeline avoid the consequences of letting itself to be double-crossed by Gov. Andrew Corruptocrat.

FERC, in a decision released yesterday, has denied…


© 2018   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service