Department of the Interior, Environment, and Related Agencies Appropriations Act, 2007 -- Continued
DEPARTMENT OF THE INTERIOR, ENVIRONMENT, AND RELATED AGENCIES APPROPRIATIONS ACT, 2007--Continued
Mr. DICKS. Mr. Chairman, I rise in support of the Hinchey amendment.
As I understand the situation, because of the price of crude oil, energy companies have made profits over the last three years totaling more than $125 billion. Exxon alone had profits in one quarter last year of $9.9 billion and are estimated to have had a profit of $36 billion in a single year.
A portion of those profits--about $7 billion according to the New York Times--came because of an administrative error made by the Mine and Minerals Service. At issue is a set of oil and gas leases entered into during the 1990's when oil was selling for $10 a barrel. As an incentive for oil companies to drill, the U.S. government said it would waive its right to royalty payments if oil prices remained low. These royalty forgiveness leases also, however, typically had a clause that said if oil exceeds $35 per barrel, the deal is off and you have to pay the royalty.
The error occurred in about 1000 leases when, evidently by accident, the $35 cancellation clause was not included. This small clerical error has created an enormous windfall estimated at, as I said, $7 billion over the next five years. GAO estimates that this problem could result in the loss $60 billion over the next 25 years in lost royalties.
This amendment merely calls on these companies to renegotiate in good faith to include the proviso included in all other leases. It does not actually void any lease. On the other hand it does say that if a company does not want to be a good citizen, the government may not want to do business with you in the future.
I don't know all the legalities of contract law in this case or the issues of constitutionality. But I think the amendment does nothing more than try to recover $7 billion of excess profits which this country needs and--the oil companies don't. I urge adoption.
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Mr. DICKS. Mr. Chairman, I just want to reiterate an important fact that was made in the full committee. Federal offshore lands already open to exploration is 80 percent of potential gas reserves offshore. Of the most current mean estimate of undiscovered, technically recoverable gas: offshore non-moratoria reserves, 328 trillion cubic feet; offshore moratoria reserves, 77 trillion cubic feet.
There is a lot of offshore drilling that can be done that is legal, as the gentlewoman said, from the Minerals Management Service's most recent report. So let us go drill there and protect our beaches. That is the best way to move forward and let the authorizers go forward and try to come up with a responsible end to this. But to precipitously move out tonight on this Peterson amendment would be a mistake, and I support strongly the Putnam-Capps amendment.
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