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Potential Budgetary Effects of Immediately Opening Most Federal Lands to Oil and Gas Leasing 1 (August 2012)

handle is hein.congrec/cbo10878 and id is 1 raw text is: AUGUST 2012 Potential Budgetary Effects of Immediately Opening Most Federal Lands to Oil and Gas Leasing The federal government offers private businesses the opportunity to bid on leases for the development of on- and offshore oil and natural gas resources on federal lands-although not all federally controlled lands are open to leasing now. The Congressional Budget Office (CBO) estimates that, under current laws and policies, the government's gross proceeds from all federal oil and gas leases on public lands will total about $150 billion over the next decade. CBO has analyzed a proposal to immediately open most federal lands to oil and gas leasing, which would affect the amounts the federal government collects in various fees and royalties both in the near term and over a longer period. Implementing such a proposal would open two categories of property now closed to development: Lands where leasing is now statutorily prohibited, notably, the Arctic National Wildlife Refuge (ANWR) and Onshore and offshore areas that are unavailable for leasing under current administrative policies, including sections of the Outer Continental Shelf (OCS)- generally, the submerged lands between 3 miles and 200 miles from the Atlantic, Pacific, and Florida coastlines-and certain onshore areas in which oil and gas leasing is either restricted or temporarily prohibited. CBO expects that opening ANWR to development would yield about $5 billion in additional receipts over the next 10 years, primarily in the form of bonus pay- ments made by private firms for the opportunity to explore for and develop resources in particular areas. Most legislative proposals related to ANWR have speci- fied that a significant portion of those receipts would be conveyed to the state of Alaska. Because extraction is cur- rently prohibited, the receipts from leasing in ANWR could not be realized under current law, and any federal receipts that were projected to result from the change would be added to CBO's baseline estimates of collec- tions from oil and gas development. The federal govern- ment also would collect royalties if oil and natural gas eventually were produced from those lands, but most roy- alty payments would not be collected until much later because of the long lag between the initial leasing agree- ment and the time when production begins. According to estimates of potential resources by the Department of Energy's Energy Information Administra- tion (EIA) and taking into account a range of probable oil prices, gross royalties from leasing in ANWR would probably total between $25 billion and $50 billion (in 2010 dollars) during the 2023-2035 period, or roughly $2 billion to $4 billion a year. (By comparison, CBO estimates that under current law, gross receipts from all federal oil and gas leasing activities in 2022 will be about $12 billion, in 2010 dollars.) The projected royalties from leasing in ANWR are very uncertain, however, as they depend both on the amount of oil that might be produced and on future oil prices. Any royalties collected from development in ANWR would be divided between Alaska and the federal government according to a for- mula that would be set by the authorizing legislation. CBO anticipates that new legislation directing the Department of the Interior (DOI) to immediately offer most other federal lands for oil and gas leasing without Note: Unless otherwise noted, all years are federal fiscal years, which run from October 1 to September 30. Numbers in the text and table may not add up to totals because of rounding.

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