BLM Press Release: Royalty Relief for Heavy Crude Expected To Increase Domestic Production

The Bureau of Land Management

NEWS

ROYALTY RELIEF FOR HEAVY CRUDE EXPECTED TO INCREASE DOMESTIC PRODUCTION

A royalty rate reduction for "heavy" crude, which will boost domestic oil production, was announced today by the Department of Interior's Assistant Secretary for Land and Minerals, Bob Armstrong and C. Kyle Simpson, the Department of Energy's Associate Deputy Secretary of Energy.

The Bureau of Land Management has published the final rule in today's Federal Register. It establishes the conditions under which wells that produce "heavy" oil (crude oil with a gravity of less than 20° API) can obtain a reduction in the royalty rate.

"Today's rule demonstrates this Administration's continued commitment to a sound domestic energy industry, which was outlined in the President's December 1993 Domestic Natural Gas and Oil Initiative." Armstrong added, "By reducing royalty rates for heavy crude, everybody wins."

"I welcome the final rule," said Acting BLM Director Mike Dombeck, "which will bring marginal or uneconomic wells back into production and, in the long term, increase revenues for the taxpayer."

The rule is the result of extensive cooperation between the Departments of Interior and Energy. "This interagency cooperation," noted C. Kyle Simpson, Associate Deputy Secretary of Energy, "is another example of this Administration's commitment to common sense government that costs less and benefits everyone."

Heavy oil production, from both federal and non-federal lands, makes up approximately one third of production in the lower-48 states. According to Department of Energy forecasts, the rule will benefit all heavy oil producers on federal land, the majority of whom are in California. In California, the rule is expected to increase recoverable reserves by up to about 70%--from approximately 133 million barrels to 229 million barrels.

BLM issued the final rule following comments received on the proposed rule published March 30, 1995. The agency received a total of 209 comments, and the overwhelming majority supported the proposed rule. Under the rule, royalty rate payments for qualifying heavy oil will be reduced on a sliding scale from 12.5% for 20° API gravity crude to a minimum of 0.5% for 6° API gravity crude. The rule will take effect thirty days after the date of publication.

This page was created by the
U.S. Bureau of Land Management,
Office of Public Affairs
1849 C Street, Room 406-LS
Washington, DC 20240
Phone: (202) 452-5125
Fax: (202) 452-5124

Please contact us with
any questions relating to accessibility of documents.

Download Adobe Acrobat Reader

This is a U.S. Government Computer System. Before continuing, please read this disclaimer and privacy statement. Accessibility