The Interior Department, in the last hours of the Reagan administration, sharply lowered on Thursday the rent most drillers pay to use federal lands.
The department said in a notice published in the Federal Register that it would charge $1 per acre for many onshore oil and gas leases issued before 1987, instead of the $2 to $3 it had been charging. This will cost the government about $35 million a year for three years beginning March 1, said Marta Witt, spokeswoman for the department's Bureau of Land Management.Leases issued after passage of a 1987 law revamping such procedures carry a statutory rental fee of $1.50 per acre for five years and $2 thereafter.
The decision should "keep more lands under lease and provide additional capital for exploration and development," said the notice signed by outgoing Interior Secretary Donald P. Hodel.
"This action is consistent with other steps the department has taken over the past two years, when oil prices bottomed out and U.S. production began to dwindle to the point of serious concerns, to the point of even national security impact," said Tim Locke, a spokesman for the bureau.
The American Petroleum Institute, the principal trade organization, reported earlier in the week that U.S. production in 1988 was 8.1 million barrels a day, the lowest in 12 years and a 3 percent decline from the previous year.
In 1985, production was 9.1 million barrels per day.
The oil price collapse of 1986 devastated domestic production and exploration, stimulated by the long price run-up of the 1970s. The Reagan administration had rejected all calls by domestic producers for a protective tariff, but did grant other rental reductions in 1986 and eased some regulations.
The number of exploration rigs at work has fallen from more than 4,000 in 1981 to fewer than 1,000 today. The amount of federal land under lease has fallen from more than 140 million acres in 1983 to less than half that today.
About half the acreage now under lease already carries a rental charge of $1 per acre, said Witt.
The rental charge is only a small part of the bureau's royalty revenue, estimated for all minerals at about $800 million annually. The department also will earn about $2.5 billion this year from oil produced from the outer continental shelf offshore.