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1 1 (November 23, 2020)

handle is hein.crs/govdcsj0001 and id is 1 raw text is: Updated November 23,2020 Federal Offshore Oil and Gas Revenues During the COVID-19 Pandemic The economic effects of the Coronavirus Disease 2019 (COVID-19) pandemic have includedareductionin demand for oil and natural gas, resulting in lower prices and decreased production. These changes have affected revenues paid to the federalgovernment fromoil and gas leasing on the U.S. outer continental shelf (OCS). Federal revenues fromOCS 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 revenueis 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 of2006 (GOMESA; 43 U.S.C. § 1331 note). The revenues also fund multiple federal programs and contribute to the General Fund of the Treasury. Data fromthe Department ofthe Interior's (DOI's) Office of Natural Resources Revenue(ONRR) generally show lower federaloffshore oil and gas revenues during April- August2020 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 ofrevenues-come froms ales in the previous month. The revenue totals reflect a mix of factors influencing oiland gas leasing,prices, andproduction. For 2020, the pandemic is a prominent (though not necessarily exclusive) factor. Figure I. Federal Offshore Oil and Gas Revenues for April Through August, 201 6-2020 ($ in milmealns fl 3c ; ,2 _6 2017 2+318 01 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 belesspronouncedwhen comparing available data for the fiscal year to date (October-August) with the s ame period in pas t fis cal years (Figure 2). Figure 2. Federal Offshore Oil and Gas Revenues for Partial Fiscal Year (October-August), 20 I 6-2020 ($ in millions) 6, $5079 SsOu $4302 $3,542 $3,251 5x $2,587 seau FY2016 FY2017 FY2018 FY2019 FY2020 OW -Aug Source and Notes: See Figure I. All years show October-August Bn s Sd DOI's Bureau ofOcean Energy Management (BOEM) has held two offshore oil and gas lease sales (Lease Sales 254 and 256) during the period in which the United States has been affected by COVID-19. The sales tookplace in March and November 2020, respectively, forleas es in the Gulf of Mexico region. Like other sales in DOI's offshore oiland gas leasing programfor 2017-2022, the sales offered all legally available unleased areas in federal waters of the Gulf. The s ales drew high (winning) bids totaling $93 million (March 2020) and $121 million (November 2020), which compare with high bids of $159 million (August 2019), $244 million (March 2019), $178 million (August 2018), $125 million (March 2018), and $121 million (August2017) for other Gulf lease sales in the 2017-2022 program. Rentalpayments, collected annually on active but nonproducing leases, typically account for a smaller portion of totalrevenues 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 havenot changed in the past five years, but the number and acreage ofnonproducing active offshore leases have varied, affecting rental payment totals. For example, in November 2020, BOEM reported 1,651 active but nonproducing leases on the OCS, whereas in January 2017, :.&U....BtoZ.~ \ Q xa S

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