Oil industry representatives will meet with Interior Secretary David Bernhardt, Energy Secretary Dan Brouillette and White House economic adviser Larry Kudlow Friday to discuss ways the Trump administration can help energy companies weather plummeting prices and demand, such as waiving royalty fees.
The teleconference with independent refiners and oil producers is set to follow a separate meeting at 3 p.m. between President Donald Trump and top industry executives at the White House. It was described by four people familiar with the matter who asked not to be named before a formal announcement. One of the issues set for discussion is waiving the payments made for oil and gas produced on federal lands and waters.
Potentially billions of dollars are at stake. The U.S. Treasury collected about $3.8 billion in royalty payments, rent and other fees from offshore oil producers in 2019, according to an Interior Department database. And onshore, companies pay a royalty rate of 12.5% for oil and natural gas under a rate established in 1920. The scope and duration of potential royalty relief was not clear Friday, though administration officials have been discussing the idea for weeks. An Interior Department spokesperson said the meeting was arranged by the White House.
Oil companies plumbing the Gulf of Mexico, including Fieldwood Energy LLC, Arena Energy LP, Talos Energy and LLOG Exploration Co., have sought royalty waivers as well as lease extensions that would give them more time to ride the rout triggered by a price war between producers Russia and Saudi Arabia, exacerbated by the slump in demand tied to the coronavirus outbreak.
West Texas Intermediate crude suffered its biggest-ever quarterly decline in the three months through March. Even after the rally of the past two days, futures are still down 56% this year.