Jeff Bingaman: “I rise to introduce by request a bill transmitted by the Administration that would eliminate mandatory royalty relief…”

“I rise to introduce by request a bill transmitted by the Administration that would eliminate mandatory royalty relief incentives for the oil and gas industry on the Outer Continental Shelf, OCS, in the Gulf of Mexico. I share the administration's position that these royalty incentives should not apply to future OCS oil and gas lease sales on a mandatory basis. Section 344 of the Energy Policy Act of 2005, EPAct, requires the Secretary of the Interior to provide for royalty relief for the production of deep gas from the OCS. Section 345 of EPAct requires the Secretary to extend royalty relief for oil and gas produced from deep water of the OCS. Under these provisions, at certain prices a set quantity of federally-owned oil and gas is allowed to be produced without any royalty payment by industry to the United States. Similar royalty relief language, included in legislation enacted in 1995, has given rise to circumstances that may expose the Treasury to up to an estimated $60 billion in forgone royalty revenues. Neither deep gas nor deep water royalty relief is warranted in this price climate. Last year, the administration requested that these incentives be repealed. The President's proposed budget for fiscal year 2009 renews this request. I hope that my colleagues will join me in supporting this legislation.”