On April 15, President Biden announced that the Department of the Interior will resume selling leases for oil and gas drilling on federal land.
This is a quick turnaround for Biden, who, during his 2020 presidential campaign, proposed a moratorium on the sale of new oil and gas leases on federal land. In his first week in office, he signed an executive order to deliver on that promise; however, a federal judge in Louisiana later blocked that order.
It’s not business as usual with the new leases, though. Royalties will increase from 12.5% to 18.75%, and the acreage available for drilling leases has been reduced by around 80% from the amount previously under evaluation. The Bureau of Land Management has also “assessed potentially available and eligible acreage” in the states of Alabama, Colorado, Montana, Nevada, New Mexico, North Dakota, Oklahoma, Utah and Wyoming.
With soaring gas prices driving 40-year-high inflation, the Biden administration has been under pressure to do more to lower them. Industry experts say it would take at least six months to a year before new drilling on federal land would lower the cost of gasoline. The administration is contending that the reopening of drilling is based on being more responsible and “says everything about what we value as a nation.”
Don’t forget, Schneider Downs offers simpLEASE, a software program that assists with the accounting requirements set forth by ASC 842. The program was developed in conjunction with the accountants at SD, is easy to use and provides accurate analysis for all lease computations. Visit simpLEASE to learn more.
