[Congressional Record Volume 144, Number 41 (Thursday, April 2, 1998)]
[Senate]
[Pages S3135-S3136]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MURKOWSKI (for himself, Mr. Nickles, and Mrs. Hutchison):
  S. 1920. A bill to improve the administration of oil and gas leases 
on Federal lands, and for other purposes; to the Committee on Energy 
and Natural Resources.


        the federal stripper well royalty reductions legislation

  Mr. MURKOWSKI. Mr. President, I rise today to introduce two important 
pieces of legislation relating to oil and gas production on federal 
lands. The first is a bill to authorize and direct the Secretary of the 
Interior to provide permanent regulatory authority to reduce the 
royalty rate for stripper oil and gas wells on federal lands.

  This legislation is necessary, Mr. President, because of the 
depressed world oil price situation. With oil prices falling below $15 
per barrel, it is more and more difficult for domestic energy companies 
to produce oil at a reasonable price. While this is good news to U.S. 
consumers because gasoline is at its lowest price ever when adjusted 
for inflation, it is not welcome news to small and independent oil and 
gas producers who will be especially hard hit.
  Under ``normal'' circumstances, stripper wells are on the edge of 
profitability. Low world oil prices threaten stripper wells and the 
jobs associated with those wells. That, in turn, has ripple effects 
elsewhere in the economy through loss of jobs in the industries that 
supply goods and services to producers, and in the communities where 
they operate.
  Mr. President, according to the Interstate Oil and Gas Compact 
Commission, there are approximately 430,000 stripper oil wells and 
170,000 stripper gas wells in the U.S. A sizeable number of these, 
perhaps as many as 30,000, are on federal lands.
  What is absolutely astounding, Mr. President, is the fact that 
stripper wells individually average a little more than 2 barrels of oil 
and 16 thousand cubic feet of gas production per day, yet in 1996 
collectively contributed 352 million barrels of oil (more than 11 
percent of U.S. production, and 5 percent of U.S. consumption), and 
almost 1 billion cubic feet of natural gas.
  There are 38,000 jobs associated with stripper wells, and another 
46,000 outside of the industry related to stripper wells. We cannot 
afford to lose stripper well production and the vital role they play in 
national energy security. Nor can we afford to lose the jobs associated 
with them. That is why I am introducing today the Federal Oil and Gas 
Stripper Well Preservation Act of 1998. I am pleased to be joined by 
Senator Nickles and Senator Hutchison in sponsoring this important 
legislation.
  Mr. President, our bill is very simple: it authorizes and directs the 
Secretary of the Interior to provide permanent regulatory authority to 
reduce the royalty rate for stripper oil and gas wells on federal 
lands. The Secretary already has limited authority to grant stripper 
oil well royalty reductions. We want to ensure that there is permanent 
authority to do so.
  We also want to make sure that the Secretary has permanent authority 
to grant royalty rate reductions for stripper gas wells, something that 
the Secretary recently has declined to do.
  Second, our bill requires the Secretary to suspend any minimum 
royalty (if applicable) and per acre lease rental on stripper oil and 
gas wells on federal lands during the time of any royalty rate 
reduction. This will ensure that stripper well operators are afforded 
the greatest leeway during hard times.
  And finally, our bill requires the applicable lease rental and 
minimum royalty to be reinstated once the Secretary terminates a 
stripper well royalty rate reduction.
  Mr. President, I believe this legislation will make a significant 
contribution in stemming the tide of lost production from our Nation's 
stripper oil and gas wells. Once plugged and abandoned, these wells--
and their vital contribution to national energy security--are more 
likely than not permanently lost. We should not lose this valuable 
national asset.
  I invite my colleagues to join Senator Nickles, Senator Hutchison and 
me in sponsoring the Federal Oil and Gas Stripper Well Preservation Act 
of 1998.


   Transfer of Certain Federal Oil and Gas Lease Management Functions

  Mr. President, the second piece of legislation I introduce today 
relating to federal oil and gas production addresses the performance of 
oil and gas lease management activities on federal lands. We have been 
hearing for some time now that States are very much interested in 
assuming certain oil and gas lease management functions that are now 
performed by the U.S. on federal oil and gas leases. We saw strong 
interest from States in assuming certain royalty management functions 
when we considered and ultimately enacted the Federal Oil and Gas 
Royalty Simplification and Fairness Act in 1996. Devolution of federal 
oil and gas regulatory functions to States is a concept whose time has 
come.

[[Page S3136]]

  The legislation I introduce today along with Senator Nickles and 
Senator Hutchison would do the following: transfer the Bureau of Land 
Management's (BLM) authority to perform certain oil and gas regulatory 
duties to States; institute distinct and reasonable time frames for 
leasing decisions and appeals; require responsible actions to increase 
leasing; and reduce federal appeals delays by rejecting stay requests 
from parties that have no standing.
  We believe this legislation will generate savings to the Treasury by 
increasing administrative efficiencies, eliminating duplication of 
effort, decreasing time frames on leasing and appeals decisions, and 
increasing certainty in leasing. We also believe the bill will increase 
federal acreage available for exploration and development, improve the 
domestic oil and gas resource base, and promote oil and gas production 
on federal lands.
  The key feature of the bill is the transfer from BLM to States 
authority over such activities as: well drilling and production 
operations; well testing and completion; conversion of a producing well 
to a water well; well abandonment procedures; inspections; enforcement 
activities; and site security. Many States already perform these 
functions on federal leases, and are willing to do so on a permanent 
basis. By transferring federal responsibility for these activities, 
federal resources could be used for other purposes.
  Our bill also requires BLM and the Forest Service to offer 
competitive oil and gas leases 90 days after lands are ``nominated'' by 
prospective lessees. The bill requires BLM and the Forest Service to 
render final decisions on administrative appeals within two years. 
These provisions will eliminate costly delays and litigation, allow 
realization of lease revenues (bonuses, rents, royalties) sooner, and 
provide stability and clarity to planning.
  Mr. President, we believe the transfer of lease management functions 
can be achieved with significant savings to States and the Treasury and 
will not disrupt lease management functions or impair important 
resource production. We urge our colleagues in the Senate to join in 
supporting this important legislation.
                                 ______