Energy revenue from federal lands dips $3.5 billion

(Ty Wright/Bloomberg)
(Ty Wright/Bloomberg)

States where energy operations on federal land provide a key source of revenue from royalties will see smaller checks in 2015, according to the U.S. Interior Department.

Lower oil prices for the past year have sapped what since 2011 had been a disbursements totaling tens of billions of dollars. Since peaking in June 2014 at a little over $107, the benchmark price for U.S. crude has fallen to as low as $38 in August. It ended Friday trading at$41.71, dropping $1.33 on the day. Domestic oil companies have struggled as a result, with dozens declaring bankruptcy and many severely restricting expenditures as their cash reserves run low.

Because of the price drop, the Interior Department’s Office of Natural Resource Revenue will disburse $9.8 billion to the states, Native American tribes, the U.S. Treasury and several conservation funds, $3.5 billion less than last year. The last time the payout fell below $10 billion was in 2010.

Funds dedicated to the U.S. Treasury will take the biggest loss, dropping to $4.7 billion this year, compared to $7.3 billion in 2014. But the share going to the states from onshore oil production also took a big hit, falling $373 million to $1.8 billion.

The highest payments to states in 2015 were $886 million to Wyoming and $496 million to New Mexico. But that’s the smallest oil royalty bonus Wyoming has gotten in 11 years. New Mexico’s take is $83 million less than 2014, though still one of state’s biggest totals since the U.S. shale boom started late in the last decade.

Compared to those two states, Texas gets a tiny fraction of the total federal disbursements —  $7 million this year, down significantly from a $22 million peak in 2006.

That’s because the state doesn’t have to share as much of its oil. The federal government owns more than 40 percent of the land area of New Mexico, and nearly 55 percent of the land in Wyoming. Federal lands make up less than 2 percent of the total area of Texas.

While oil revenue makes up most of the disbursements, the Office of Natural Resource Revenue also takes in royalties from natural gas, minerals and renewable energy development. The agency said states use the funds for “a variety of local needs, ranging from school funding to infrastructure improvements and water conservation projects.”

The agency also said that disbursements to Native American tribes help those communities “develop infrastructure, provide healthcare and education, and support other critical community development programs, such as senior centers, public safety projects, and youth initiatives.” The funds distributed to tribes fell to $852 million for 2015, nearly $300 million less than last year’s total.

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