H.R. 526: Declaration of Energy Independence Act

This bill, titled the Declaration of Energy Independence Act, focuses on making changes to the royalty rates associated with oil and gas extraction on federal lands. Its main provisions can be summarized as follows:

Changes to Royalty Rates

The bill proposes to lower the royalty rate for oil and gas leases from 16.67% to 12.5%. This change will apply to new leases and will also affect ongoing leases under certain conditions.

Minimum Bid Amendment

It decreases the minimum bid for leasing oil and gas rights from $10 per acre to $2 per acre for a two-year period following the bill's enactment. This adjustment aims to make it easier for companies and individuals to bid for leases.

Annual Rental Rates Revisions

The act amends the rental rates for oil and gas leases, establishing a new structure where:

• For the first five years of a lease, the annual rental is set at $1.50 per acre.
• For years beyond five, the rental will be $2 per acre per year.

Elimination of Fees

It removes the fees associated with expressing interest in leases, potentially lowering the overall costs for leaseholders.

Changes Related to Noncompetitive Leasing

The bill establishes noncompetitive leasing provisions that allow certain lands without competitive bids to be leased quickly. If no bids meet minimum acceptable levels, these lands can be re-offered for leasing within a set time frame.

Reinstatement Conditions

The proposed act offers more favorable conditions for the reinstatement of certain leases, potentially aiding those who had lost their leases due to nonpayment under specified circumstances.

Authorization of Lease Adjustments

The bill allows the Secretary of the Interior to reduce the royalty rates on existing leases under specific circumstances, providing flexibility to address economic challenges that operators might face.

Mineral Estate Lease Continuation

It includes provisions allowing holders of certain leases to continue operation under adjusted terms when the federal government has a vested interest in mineral estates.

Competitive Lease Term

All leases issued under this act will have a primary term of 10 years, extendable as long as oil or gas is produced in paying quantities.

Handling of Abandoned Claims

Lastly, it integrates provisions related to handling unpatented oil placer mining claims deemed abandoned due to the owner failing to file necessary documents. It outlines a process for potentially issuing new leases on these lands if specific conditions are met.

Relevant Companies

• XOM (Exxon Mobil Corp): May benefit from decreased royalty rates and lower minimum bids, allowing for expanded operations on federal lands.
• CVX (Chevron Corporation): Similar to Exxon, potential for reduced costs in new leases could enhance profitability on federal leases.
• PXD (Pioneer Natural Resources Company): Could see impacts from changed leasing costs, affecting their exploratory and operational strategies in new federal territories.