The process and impacts of oil and gas development in the West
Multiple-use mandates have long governed the use of public lands in the West. While oil and gas drilling remains one important use of America’s public lands, by law it is not the dominant use—just one of many activities that occur on national public lands. Planning, oversight, and forward-looking energy priorities are necessary to ensure balanced resource use on public lands.
The 2022 Inflation Reduction Act included some major reforms to the federal oil and gas drilling system. It raised the cost to lease public lands for drilling, as well as the royalties on oil and gas produced on public lands. It also eliminated non-competitive leasing, which allowed companies to lease public lands for just $1.50 per acre. Finally, it added a royalty on all methane extracted from public lands, including methane gas that is vented or flared.
Yet when companies hit hard times, they can simply abandon oil and gas wells, leaving taxpayers with the environmental risks and reclamation bills. That’s because the federal government doesn’t require oil and gas companies to set aside enough money to clean up their messes. The current federal bonding minimum is set at $10,000 per well, while in reality the average cost to fully reclaim and plug a well is nearly$80,000. Unfortunately, a provision to raise bonding rates was removed from the Inflation Reduction Act by the Senate Parliamentarian.
While the Inflation Reduction Act implemented many important fiscal reforms to the federal oil and gas program, 90 percent of national public lands are still open for oil and gas development. Companies currently have millions of acres of public land under lease, many of which sat idle even as gas prices spiked in the spring and summer of 2022. Idle leases lock up lands that could be managed for other purposes such as recreation, conservation, renewable energy development, or climate change mitigation—while doing nothing to offset U.S. energy costs. Additionally, the Inflation Reduction Act tied renewable energy leasing on public lands to oil and gas leasing, locking in more oil and gas development for years to come.
Policymakers and land managers have a responsibility to ensure that oil and gas growth doesn’t outpace protections for Western water, outdoor spaces, and communities. Additionally, it is the job of the Interior Department to strike a balance between conservation and energy development, and between negative drilling impacts and benefits. Our system for oil and gas development on public lands still favors oil and gas companies over Western residents and wildlife.