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Interior Agencies to Conduct Royalty Review Study to Ensure Federal Leasing Policies Provide Fair Return on Public Oil and Gas Resources

    Interior Agencies to Conduct Royalty Review Study to Ensure Federal
Leasing Policies Provide Fair Return on Public Oil and Gas Resources

WASHINGTON, DC – As part of Secretary of the Interior Ken Salazar's efforts
to ensure that American taxpayers receive a fair return from energy
resources developed on public lands and on the Outer Continental Shelf, the
Interior Department's energy agencies will review oil and natural gas
fiscal systems in other countries and compare them with those used by the
U.S. Government for federally-owned offshore and onshore lands.

Interior’s Minerals Management Service (MMS) and Bureau of Land Management
(BLM) will jointly contract for the competitive “Comparative Assessment of
the Federal Oil and Gas Fiscal System” study in a cooperative interagency
agreement. The results of this study will enable the Department to ensure
that its leasing policies are providing the public a fair return on
federally-owned oil and gas resources, while balancing other objectives,
including production and environmental stewardship.

“MMS and BLM are undertaking this study in response to a 2008 Government
Accountability Office report that suggested the return from federal oil and
gas leases is lower than what other resource owners worldwide are
receiving,” said MMS Director Liz Birnbaum. “We are assessing the federal
oil and gas fiscal systems because the Department does not routinely
monitor fiscal systems in other countries. We need to consider
international comparisons in selecting fiscal parameters for our leases.”

"The Administration is committed to ensuring that taxpayers receive a fair
return from mineral production on their lands," said BLM Director Bob
Abbey. "This study will provide some common-sense grounds for comparison
as we evaluate our royalty rates and our oil and gas fiscal policies in the
context of global markets.”

The purpose of the study is to inform decisions about federal lease terms,
such as a royalty, by consistently comparing the federal oil and gas fiscal
systems with those of other countries. The study will explain the methods
and appropriate uses of international comparisons, collect data and
construct consistent comparisons, and apply that information to current
issues about federal lease terms. Comparison of the U.S. government return
with that of other countries may reveal the potential for greater revenues
to the federal government.

The study’s final report is expected to be completed nine months after the
contract is awarded.

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