Mon February 13, 2012

Oil and Gas Companies React Cooly to Interior Budget Proposal

President Obama’s proposed budget for the Department of Interior would include a new fee levied on idle oil and gas leases on federal lands. 

The Interior Secretary, Ken Salazar, says it’s an attempt to incentivize the industry to develop their existing leases. 

The former Colorado Senator made that statement during a conference call touching on highlights in the Interior’s $11.5 billion budget request. That request also calls for a repeal of a provision in the controversial 2005 Energy Policy Act that barred the government from collecting certain processing fees from oil and gas companies that want to drill on public land.

"The oil and gas industry is doing just fine today economically," Salazar said. "And essentially asking them to pay their own way to me is a policy call that just makes tremendous sense."

But industry groups accused the Administration of trying to have it both ways.

Kathleen Sgamma, vice president of government affairs with the Colorado-based Western Energy Alliance, said the proposed fees will only encourage companies to drill on private land, which means less revenue for federal coffers. 

"It’s really hard to call a fee an incentive, only in twisted government logic would a fee be considered an incentive. 

Still, the Obama Administration’s budget proposal faces an uncertain future, with a deeply divided Congress and an election in November.