President Trump’s One Big Beautiful Bill includes several provisions expanding federal subsidies and tax benefits for the oil and gas industry.
Among its most significant energy-related provisions, the legislation mandates the resumption of quarterly onshore oil and gas lease sales under the Mineral Leasing Act, effectively repealing restrictions introduced by the Inflation Reduction Act.
The Department of the Interior is required to conduct at least four lease sales per year in nine states — including Wyoming, New Mexico, Texas and Oklahoma.
The bill redefines “eligible” lands to include all land not specifically prohibited by statute and requires the Bureau of Land Management to process lease requests within 18 months. Lease terms must match existing land use plans and cannot impose additional environmental stipulations beyond those already adopted.
Offshore, the bill requires at least 30 new Gulf of Mexico lease sales through 2040 — two per year from 2026 to 2039 — and six additional sales in Alaska’s Cook Inlet.
For Gulf leases, the Department of the Interior must offer no fewer than 80 million acres per sale, or all unleased and available acres if fewer remain.
The bill also modifies the federal 45Q tax credit program for carbon capture and sequestration, creating what lawmakers describe as “parity” between permanent storage and carbon utilization.
The change effectively raises the subsidy for companies that use captured carbon dioxide to extract more oil and gas through enhanced oil recovery — a process that involves injecting CO2 underground to push additional fossil fuels toward production wells.
Previously, CCS projects earned $85 per metric ton of permanently stored carbon, while EOR projects earned $60 per ton.
Under the new law, both uses will qualify for the full $85 credit. For direct air capture projects, the credit increases from $130 to $180 per ton for EOR, aligning with the credit for permanent storage.
Supporters argue the changes will help advance carbon management technology and attract investment. Critics say the updated structure weakens the incentive for long-term CO2 storage and instead subsidizes further fossil fuel production.
The bill also alters key provisions of the Corporate Alternative Minimum Tax, a backstop tax aimed at ensuring large corporations pay a baseline level of federal taxes.
Under previous rules, oil and gas companies were required to spread deductions for intangible drilling costs over the life of a well. The OBBB allows these deductions to be taken upfront, reducing taxable income and providing immediate financial relief for drilling operations.
Other provisions include:
Reduced royalty rates: The bill lowers federal royalty payments for oil and gas extracted on public lands and waters from 16.67% to 12.5%.Fee eliminations: The legislation removes several federal fees previously imposed on industry activities, including charges related to methane emissions.
