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Posts Tagged ‘royalty rates’

OCS oil and gas leasing provisions in the “Big Beautiful Bill” – good holiday reading ðŸ˜€

Posted in Alaska, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , on May 23, 2025| Leave a Comment »

Part VIII, Offshore OIl and Gas Leasing, is a good read for those interested in OCS leasing policy. This cleverly crafted part of the bill specifies leasing schedules, streamlines the leasing process, and minimizes litigation risks. Highlights:

  • Minimum royalty rates return to 12.5% from 16.67% post-IRA. (This is good for small, shelf producers.) The maximum rate remains 18.75%.
  • Requires a Gulf of America lease sale by 8/15/2025, a sale by 3/15 and 8/15 in each of the following 14 years (2026-2039), and a sale by 3/15/2040. 80+ million acres must be offered at each sale unless that amount of acreage is no longer available for leasing.
  • The lease form, lease terms, economic conditions, and stipulations 4 through 10 must be the same as for Lease Sale 254 (3/18/2020). Stipulations 1-3 may be updated.
  • Requires seven 1+ million acre (if available) Cook Inlet lease sales from 2026 – 2032. Beginning in 2035, 90% of the revenues go to the State of Alaska.
  • The required lease sales may be in addition to the lease sales held under the 2024-2029 National Outer Continental Shelf Oil and Gas Leasing Program.
  • Adherence with the Biological Opinion shall satisfy the Secretary’s obligations under the Endangered Species Act of 1973 and the Marine Mammal Protection Act of 1972
  • Previous EIS’s for the Gulf of Mexico shall satisfy the Secretary’s NEPA obligation.
  • Consistency determinations prepared by BOEM for Lease Sale 261 for the States of Texas, Louisiana, Mississippi, Alabama, and Florida will satisfy the Secretary’s CZMA obligations.
  • The Secretary may waive any requirement under the Outer Continental Shelf Lands Act that the Secretary determines would delay issuance of a lease.
  • A lease must be issued to the highest responsible qualified bidder not later than 90 days after the sale date.
  • The Secretary shall establish a process through which a Governor may nominate for leasing under a lease sale held under this section an area of the OCS that is adjacent to the waters of the State; and is unleased and available for leasing. If the Governor of a State nominates an area, the Secretary shall include the area in the next scheduled sale. (It appears that this provision applies only to the Gulf of America. Objective?)
  • G&G surveys must be approved within 30 days after a complete application is received.
  • A lease awarded under Lease Sale 259 or Lease Sale 261 shall not be set aside, vacated, enjoined, suspended, or cancelled except in accordance with section 5 the Outer Continental Shelf Lands Act (43 U.S.C. 1334). Also, new terms or conditions may not be added to these leases. (This protects lessees from pending litigation related to these leases).
  • Any action to approve, require modification of, or disapprove any exploration plan, development and production plan, bidding procedure, lease sale, lease issuance, or permit or authorization related to oil and gas exploration, development, or production, or any inaction resulting in the failure to hold a lease sale shall be subject to judicial review only in a United States court of appeals for a circuit in which an affected State is located.

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