Sen. Cassidy urges DoI to examine, lower Shallow water drilling royalty rates

Sen. Bill Cassidy (R-LA) is encouraging the Department of Interior to provide royalty relief and other policies to encourage more shallow water drilling in the Outer Continental Shelf.

Cassidy recently forwarded correspondence to Interior Secretary David Bernhardt regarding the matter. He noted that shallow water oil production in the Outer Continental Shelf has declined by 75 percent between November 2000 and September 2018 and of the more than 7,000 platforms installed in shallow water Gulf regions over decades, just 28 percent remain with many producing fewer than 300 barrels of oil equivalent each day.

“Increased shallow water drilling increases production, which increases federal royalty payments, and creates more American and Louisiana jobs,” Cassidy wrote. “This begins by making a better business case for drilling. Without incentives such as royalty relief for stakeholders to reinvest and apply the benefits of new technologies to increase production and grow revenues for aging shallow water wells and infrastructure, I am concerned declines will continue, leading to the removal of this infrastructure, job loss and stranded oil and gas important to the nation’s energy security.”

Cassidy maintains extending the life of shallow water wells could lead to additional future royalties and other revenues from sustained development. He continued, stating that future production in the Gulf regions is also important to achieve the administration’s ultimate goal of achieving greater energy independence.