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1 1 (September 29, 2020)

handle is hein.crs/govdccc0001 and id is 1 raw text is: FF. ' ,iE S .r, i , Updated September 29, 2020 Federal Offshore Oil and Gas Revenues During the COVID-19 Pandemic Since March 2020, the Coronavirus Disease 2019 (COVID- 19) pandemic and associated recession have reduced demand for oil and natural gas, resulting in lower prices and decreased production. These changes affect revenues paid to the federal government from oil and gas leasing on the U.S. outer continental shelf (OCS). Federal revenues from OCS oil and gas include bonus bids from lease sales, rents paid prior to production on leases, royalties collected during production, and other fees. A portion of federal offshore oil and gas revenue is shared with coastal states under the Outer Continental Shelf Lands Act (OCSLA; 43 U.S.C. §§1331-1356b) and the Gulf of Mexico Energy Security Act of 2006 (GOMESA; 43 U.S.C. § 1331 note). The revenues also fund multiple federal programs and contribute to the General Fund of the Treasury. Data from the Department of the Interior's (DOI's) Office of Natural Resources Revenue (ONRR) generally show lower federal offshore oil and gas revenues during April- August 2020 as compared with the April-August period in recent years (Figure 1). The April-August data largely reflect activities in March-July, because royalties which constitute the majority of revenues come from sales in the previous month. Each year's revenues reflect a mix of factors influencing oil and gas leasing, prices, and production, and the pandemic is a prominent (though not necessarily exclusive) factor in 2020. Figure I. Federal Offshore Oil and Gas Revenues for April Through August, 2016-2020 { in milions) . . . . . .......... :..:..:..:.:.. :..:..:..:.:. :.:- ' :~i~~i~~i~~i: ......... ......... ................ ............... 20 201; 29O'2S I 2020 Source: ONRR, Revenue by Month, at https://revenuedata.doi.gov/ downloads/revenue-by-month!. Includes bonuses, rents, royalties, and other revenues for the commodity categories Oil, Gas, Oil & Gas, and NGL (natural gas liquids). Does not include inspection fees. Notes: Royalties reflect sales in the previous month. Bonus payments may reflect lease sales from earlier months. Because the pandemic began midway through the fiscal year, its effects would be less pronounced when comparing FY2020 to date (October-August) with the same period in past fiscal years (Figure 2). Figure 2. Federal Offshore Oil and Gas Revenues for Partial Fiscal Year (October-August), 2016-2020 ($ in millions) $5,079 Ssj0 $4,02 ........ ....... $3,542 ........ ......... $3,251 .... .... ... .. .. • . .. .. ......... .......:. .........+ +:+: :+: .................+:+ . ......... .........: S $2,587 .... .... .... FY201 t5 fY'2OIY FY2O1S :P019 Frf2O2 ::Oct.-Aug. Source and Notes: See Figure I. All years show October-August. DOI's Bureau of Ocean Energy Management (BOEM) has held one offshore oil and gas lease sale (Lease Sale #254) during the period in which the United States has been affected by COVID-19. This sale took place in March 2019 for leases in the Gulf of Mexico region. Like other sales in DOI's offshore oil and gas leasing program for 2017-2022, it offered all legally available unleased areas in federal waters of the Gulf. The sale drew high (winning) bids totaling $93 million, which compares with high bids of $159 million (August 2019), $244 million (March 2019), $178 million (August 2018), $125 million (March 2018), and $121 million (August 2017) for other Gulf lease sales in the 2017-2022 program. BOEM postponed an additional Gulf lease sale (Lease Sale #256) that had been scheduled for August 2020. BOEM stated that postponement until November 2020 would allow the agency to analyze oil and gas market changes stemming in part from the COVJD-19 pandemic. Rental payments, collected annually on active but nonproducing leases, typically account for a smaller portion of total revenues than do royalties or bonuses. Operators pay varying rental rates per acre, based on the water depth of the lease, the age of the lease, and other factors. Rental rates have not changed in the past five years, but the gognpo 'popmm ggmm g , q 'S a X 11LULANJILiN,

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