Data show surrendered drilling permits and leases on national public lands
The oil and gas industry has spent recent months fear mongering about the Biden administration’s temporary pause on new federal oil and gas leases; however, new analysis finds that the industry has been forfeiting drilling leases and permits for years.
Between 2011 and 2020, the oil and gas industry failed to use more than 20 million acres of approved onshore federal leases. These leases were terminated, expired, or relinquished without ever going into production. Similarly, between 2016 and 2020, more than 8,400 approved onshore drilling permits (APDs)—54% of all APDs approved during those five years—either expired without being used or are currently sitting unused. (An additional 420 permits have been approved since the beginning of 2021 and are also currently unused.) In other words, the industry has had the chance to take advantage of thousands of drilling permits and millions of acres of federal drilling leases, but it hasn’t. It is clear that the Biden administration’s leasing pause will not adversely impact companies, as they already regularly and voluntarily surrender leases and permits.
The Interior Department is currently evaluating the impact of America’s public lands drilling program on our climate, communities, and taxpayers. This commonsense first step begins the long-overdue process of reforming the current broken, century-old leasing system, while neither banning new drilling or permitting, nor preventing oil companies from using their existing leases or drilling permits. While the industry may be worried about the temporary federal leasing pause in public, they are internally aware that their public lands stockpile of leases and permits is more than adequate to sustain current operations for years to come. Indeed, industry CEOs have made that exact point in calls with investors.
Here is the oil and gas industry’s forfeited public lands stockpile
Oil and gas leases
Between 2011 and 2020, 20.8 million acres of approved onshore federal leases were never used to produce oil or gas, instead locking up acres of public land and cutting off value for taxpayers with little to no return. Of these leases, 12.1 million acres were “terminated” for failure to pay rent (or for other reasons), 7.0 million acres “expired” (i.e., reached the end of their 10-year term), and companies voluntarily “relinquished” 1.7 million acres—all without ever going into production
Some states make up a disproportionate percentage of unused leases: 6.1 million acres, or 29% of all unused acres between 2011 and 2020 were in Wyoming, while Nevada and Utah made up 24% and 11% of unused acres respectively.
Forfeited Leases, 2011-2020
Applications for permits to drill
When a producer is ready to make use of an oil and gas lease and start producing, they are required to file an application for permit to drill (APD). Approved APDs represent tangible opportunities to drill on sites that have passed through the regulatory review and approval process, and where operators have identified an oil and gas deposit. However, many approved APDs expire or sit unused, demonstrating that operators are awash in unnecessary permits and would rather surrender them than put them through into production.
Unused and approved APDs also represent a waste of government employee time and resources. The Bureau of Land Management and other agencies are required to complete onsite inspections and National Environmental Policy Act (NEPA) analysis on sites before approving an APD, taking up valuable staff time that could otherwise be used to better manage public lands for the benefit of taxpayers and other public lands users. Operators are required to submit a $10,360 fee to file an APD.
Between 2016 and 2020, 54% of all approved APDs either expired without being used or are currently sitting unused. Operators had over 8,400 permits to drill on federal lands approved during that time frame that they opted not to use. (An additional 420 permits have been approved since the beginning of 2021 and are also currently unused.)
Forfeited APDs, 2016-2020
Some operators have forfeited more permits than others. Below are the top 25 operators by forfeited permits between 2016 and the end of 2020. Many of these top operators are members of the Western Energy Alliance (WEA), a group that has vehemently opposed the Biden administration’s common-sense leasing pause. This evidence suggests that many WEA members do not in fact need more drilling permits and leases.
Top 25 Operators by Forfeited APDs, 2016-2020
Data & Methodology
All data from the Bureau of Land Management’s LR2000 database and Automated Fluid Minerals Support System (AFMSS). Leases reported did not go into production at any point in time, and all leases terminated but later reinstated have been removed from the dataset. It is possible that some number of leases were terminated for reasons other than non-payment of rent.