Saturday, June 02, 2007

GAO: US gives oil firms good deals

WASHINGTON - When it comes to taking oil and natural gas from government land and waters, the oil companies are getting a good deal, says a congressional report.

The

Government Accountability Office said Friday that the U.S. government gets less for letting private companies take oil and gas from its land and coastal waters than a half dozen states and many foreign countries.

The GAO said five studies it examined showed the U.S. government consistently is near the bottom when compared with other countries and energy-producing states such as Alaska and Louisiana in the revenue cut it gets from oil or gas pumped under government leases.

A study, for example, by the federal Minerals Management Service last year showed the government's take from Gulf of Mexico deep-water production was 29th among 31 "fiscal entities" examined, said the GAO. It fared only a little better, at 26th, when examining production in the Gulf's shallow waters.

The study examined what commonly within the industry is referred to as the "government take," or total revenue collected as a percentage of the value of the oil and gas produced. It includes royalties, corporate income taxes, fees, bonuses and other taxes.

`Collectively ... the United States receives a lower government take from the production of oil in the Gulf of Mexico than do states such as Colorado, Wyoming, Texas, Oklahoma, California and Louisiana and many foreign countries," the GAO report said.

Among the countries cited as collecting a higher percentage of money from their offshore energy production were: Australia, Angola, Norway, the United Kingdom and Trinidad & Tobago.

The GAO said one study showed the U.S. government 55th among 61 "fiscal systems" in 50 countries in the percentage of revenue collected from offshore oil production.

In fiscal 2006, oil and gas companies received more than $77 billion from the sale of oil and gas taken from federal lands and Outer Continental Shelf waters, and paid the federal government about $10 billion in royalties, said the GAO.

Recently, royalties under future leases for Gulf of Mexico deep water drilling were increased from 12.5 percent to 16.67 percent.

That's expected to produce an additional $4.5 billion in federal revenue over 20 years, according to Interior Department estimates. But the GAO said about $820 million of that will be offset by a reduction in rental fees and by a slight drop in production because of the royalty increase.

The GAO acknowledged there is a "potential trade-off" between trying to collect more revenue and seeing a drop in oil and gas production. It said the challenge will be "striking a balance between meeting the nation's increasing energy needs and ensuring a fair rate of return for the American people from oil production on federally leased lands and waters."

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Government Accountability Office: http://www.gao.gov