U.S. Interior Department proposes delay in royalty payments to help drillers

FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. Picture taken November 22, 2019. REUTERS/Angus Mordant/File Photo

(Reuters) - The U.S. Department of Interior has proposed allowing drilling companies to delay their royalty payments on oil and gas produced on federal lands due to the impacts of the coronavirus pandemic, according to a White House web site.

The proposal follows repeated requests from oil and gas producers for blanket royalty relief to help them weather a meltdown in energy prices caused by government stay-at-home orders that have obliterated fuel demand.

Interior’s Office of Natural Resources Revenue sent a proposed rule titled “ONRR Reporting and Royalty Payment Delay Related to Coronavirus Disease 2019 (COVID-19)” for White House review on May 20, according to the White House Office of Management and Budget web site.

Details of the proposal were not available on the site.

A spokesman for ONRR, Chris Mentasti, said the agency “does not comment on draft rules prior to their publication.”

The draft is under review by OMB’s Office of Information and Regulatory Affairs, which vets proposed regulations.

A key Democrat in Congress urged OMB to reject the proposal.

“This is money to which the American people are legally entitled, and delaying these payments is not in the public interest,” Raul Grijalva, chair of the House Committee on Natural Resources, said in a letter dated May 27 to OMB Acting Director Russell Vought.

The U.S. Bureau of Land Management, which oversees drilling on federal lands, last month said it would consider royalty relief only on a case-by-case basis under an established process. It has since approved royalty cuts on at least 76 leases, according to a government database.

Reporting by Nichola Groom, Editing by Franklin Paul and Andrea Ricci