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Oil & Gas Leasing

Westerners expect a balance between conservation and energy development on public lands, but the current system is tilted in favor of the oil and gas industry.

The Oil & Gas Leasing Process on U.S. Public Lands

The current system of energy development on public lands is tilted towards the oil and gas industry. Private oil and gas companies drive the process of nominating and leasing lands for drilling and development, while taxpayers get shortchanged.

New oil and gas leases can be purchased on U.S. public lands for as low as $2 per acre and royalty rates on public lands remain at 12.5 percent—an extremely low rate first established nearly a century ago.

Oil and gas companies stockpile leases, but fail to produce on many of them. Millions of leased acres sit idle and thousands of approved drilling permits go used. The cost to leave lands idle is only $1.50 per acre annually, incentivizing speculation on U.S. lands. And when companies hit hard times, they can abandon oil and gas wells, leaving taxpayers with the environmental risks and reclamation bills.

The Bureau of Land Management oversees nearly 700 million acres of taxpayer-owned oil and natural gas on U.S. public lands. Americans expect federal officials to strike a balance between conservation and energy development, while guaranteeing taxpayers receive a fair return from the use of their resources.

Here are some key facts:

  • Oil production on U.S. public lands is up 60 percent over the last decade.

  • Natural gas production is near all time highs in the United States, increasing dramatically over the last decade.

  • 90 percent of U.S. public lands managed by the BLM are open to oil and gas leasing and development. Only 10 percent are protected for recreation, conservation, and wildlife.

  • In fiscal year 2016, BLM approved 2,200 new drilling permits, but oil and gas companies used only 850. That means companies received 2.5 times more drilling permits than they needed.

  • Between 2009 and 2016 the BLM made nearly 31 million acres of public lands available for oil and gas development at the behest of companies. Less than 8 million of those acres received bids from oil or gas companies, while more than 23 million acres went without bids.

  • Currently, for each leased acre producing oil and gas (about 12.8 million acres), one leased acre sits unused (about 14.4 million acres).

  • Oil and gas companies are sitting on nearly 8,000 drilling permits, which are approved, have cleared all environmental reviews, and are ready to be drilled, but for whatever reason are not being used.

  • Royalty rates on U.S. public lands are set at 12.5 percenta rate that was first established nearly a century ago. States across the West charge companies a royalty rate of between 16.67 percent and 25 percent for the right to produce oil and gas on state-owned lands.
  • In 2015 and 2016, BLM postponed multiple lease sales because industry officials failed to nominate any parcels for leasing.