NOIA President Erik Milito weighs in after Congressional Democrats introduced the Stop Giving Big Oil Free Money Act, which the lawmakers say will repeal "a loophole" in the Deepwater Royalty Relief Act of 1995 (DWRRA) that allowed oil and gas companies to avoid paying approximately $18 billion in royalties between 2000 and 2018.
The Deepwater Royalty Relief Act (DWRRA) was a bipartisan program signed into law by President Clinton that jump-started the U.S. offshore oil and natural gas industry. Between 2000 and 2018, a stronger U.S. offshore industry generated more than $122 billion for the Federal government through high bids, royalties and rents and helped unlock a higher quality of life through affordable and reliable energy. The DWRRA as well as the recent efforts by the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM) to study shallow water royalty rates are important steps in ensuring that the US has a competitive offshore royalty program.
The global offshore oil and natural gas environment is becoming a tighter and more competitive market. While we expect record-setting production in the Gulf of Mexico for years to come, it is important for policymakers to recognize that the US is no longer the only offshore player. A recent report by IHS Markit suggests that countries like Brazil, Guyana and Mexico are attracting billions in investment as part of the competitive global market.
Instead of sending jobs, economic growth and energy security abroad, Washington, D.C. policymakers should find new solutions that help America remain the offshore energy leader.