Group calls for federal O&G royalty hike

Colorado and Wyoming are missing out on millions of dollars in revenue because of a gap between federal royalty rates and state rates for oil and gas extraction, according to a new report.

The Denver-based Center for Western Priorities, which defines itself as a “nonpartisan engagement center” advancing “responsible conservation and energy practices in the West,” released the study this week with a call to raise federal royalties.

According to the study, “The federal onshore royalty rate should be increased to provide a fair return to states and taxpayers. The law requires the [Bureau of Land Management] to assess a royalty rate of ‘not less than’ 12.5 percent; the president and the secretary of the interior have the executive authority to increase that rate without congressional action.”

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In Wyoming, which has an economy built around the energy industry, the report points out extraction taking place on state lands demands a royalty of 16.67 percent, compared to the 12.5 percent required by the BLM. Federal royalties are split between the federal and state governments, meaning Colorado and Wyoming, among others, would benefit from the increased federal royalties.

If the federal rate were raised to 16.67 percent, Colorado would see an additional $36.6 million in revenue, and Wyoming would see an additional $161.2 million.

The highest state royalty resides in Texas, where 25 percent is returned to the state from oil and gas producers that extract from state lands.

“Hundred-year-old federal royalty rates are putting an unnecessary strain on many western communities,´ said Center for Western Priorities Policy Director Greg Zimmerman. “Updating the federal rates will mean more teachers in classrooms, more cops on patrol, improved infrastructure and conservation efforts that keep pace with industrial development.”