Bennett, Salazar spar over Utah oil development

WASHINGTON — Sen. Bob Bennett says that higher taxes proposed by the Obama administration on the oil and gas industry will chase them off federal lands in Utah. But Interior Secretary Ken Salazar says increases would simply give taxpayers long overdue fair payments.

The two sparred Tuesday during a Senate Appropriations subcommittee meeting, where Bennett attacked proposed royalty increases in Obama's 2011 budget on oil and gas, plus new or higher fees for drilling permits, inspections and holding leases that are not yet producing.

Bennett said those increases, coupled with greater environmental restrictions the administration has proposed, have "companies just saying, 'Well, we're just not going to fool with the federal government.' "

He said they are saying, "We're going to take our rigs and go someplace else. And they move to Oklahoma or Texas or some other places. … We have a tremendous unemployment problem and (loss of) jobs in Uintah County and Duchesne County as this industry dries up."

Salazar said, however, "Our job, as I see it as the secretary of Interior, is to make sure that taxpayers are getting a fair return." He said increases proposed are fair and affordable.

He noted the 12.5 percent royalty paid on federal lands by oil and gas producers has been the same since the 1920s, while some states like Texas charge up to a 20 percent royalty for oil production on their state-owned lands.

But Bennett said a big difference exists on what oil companies get for their money in Texas and on federal lands in Utah or other Western states.

"If you make an application in Texas to drill on state land, the application is approved in about 19 or 20 days." But, Bennett said, some applications on federal lands in Utah have taken up to seven years, and then some of them were reversed by the Obama administration when it took office.

"I think they'd be happy to pay a 20 percent royalty if they could get on the ground within 19 days. It's the combination of increased fees for which they get no services. If you get something for what you pay, they're willing to pay," Bennett said.

Bennett said the oil and gas program on federal lands brings the government $146 for every $1 it spends and creates many jobs, so he said the government should look at ways to expand drilling and not hurt it.

"I'm a businessman. And if we have a problem with a product, you don't raise prices on it in an effort to have it move more. We have something here that we want to continue, yet with all these increased fees and increased prices, I think there's going to be an impact both on the jobs and the amount of money that the federal government receives," he said.