U.S. Sen. Bill Cassidy has asked U.S. Interior Secretary David Bernhardt to lower the royalty rate shallow water oil producers must pay the government to save a sector of the industry where production has plummeted, the News Star reports.
The current royalty rate, or tax rate producers must pay, is 12.5%. Shallow water production in the Gulf of Mexico has declined by 75% since 2000, the Republican senator said.
While overall offshore production has increased, Cassidy said most of it has shifted to deeper waters where the largest companies operate.
Cassidy said smaller, independent producers like many of those based in Louisiana have all but abandoned their shallow water platforms.
“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 these 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 wrote in a letter to Bernhardt.
