By the numbers: Onshore oil and gas leasing and drilling under the Biden administration
The Biden administration inherited a federal oil and gas program that was broken and rigged in favor of the oil and gas industry. It has been this way for decades, as documented repeatedly by the Government Accountability Office, Congressional Budget Office, and DOI’s Inspector General, and it reached a low point during the Trump administration, which tried (and failed) to make oil and gas drilling the “dominant” use of America’s public lands.
On August 16, 2022 the Inflation Reduction Act was signed into law. With this important piece of legislation, Congress brought about long-overdue changes to the federal oil and gas leasing program, including the first-ever increase to the onshore royalty rate for new leases in over 100 years and the elimination of the practice of leasing lands “noncompetitively” for just $1.50 per acre. These changes are significant steps towards ensuring fairer returns to taxpayers from the drilling that takes place on public lands, and curbing wasteful leasing practices that have threatened public lands, waters, and wildlife for far too long. But there is still more work to do to modernize the oil and gas leasing process.
Minimum federal bonding rates—which the Government Accountability Office has found BLM to use 82 percent of the time—have not been increased in over 60 years, allowing for oil and gas companies to walk away from the wells they drill on public lands without paying the full cost required for cleaning them up. Initial drafts of the Inflation Reduction Act would have strengthened federal bonding requirements to better align with the true total cost of plugging and reclaiming oil and gas wells. Unfortunately, this critical piece of reform was removed from the Inflation Reduction Act by the parliamentarian before the bill’s passage.
The Department of the Interior must now do its part to durably implement the reforms in the Inflation Reduction Act, as well as take action to make other important changes, such as raising federal bonding rates, to ensure the federal oil and gas program works for everyone, not just the oil and gas industry. In order to do so, Interior must carry out a robust rulemaking process that enshrines responsible leasing practices for years to come.
Meanwhile, many industry lobbyists and politicians are continuing to use the energy crisis caused by the war in Ukraine to call for opening more public land for drilling. But publicly-available data compellingly show that leasing and drilling on federal public lands won’t alleviate pain at the pump. Combined, the oil and gas industry holds leases to nearly 24 million acres of publicly-owned minerals, almost half of which sit unused. Companies also hold more than 6,700 approved but unused drilling permits, all of which could be put to use today. Further, oil production on public lands is at its highest level in nearly two decades, despite industry claims that the Biden administration has suppressed domestic production.
This dashboard provides an at-a-glance look at onshore oil and gas leasing under the Biden administration, including permitting and production that has occurred on leases sold prior to the start of the administration and statistics from past and upcoming lease sales. Learn more about the data on our dashboard, or jump straight in. This dashboard will be regularly updated.
To understand this dashboard and the terms therein, it’s important to understand the overall process for leasing and development on America’s public lands. Industry is in the driver’s seat from the get-go. The process starts when companies nominate lands they’d like to see offered for lease. In response, the Bureau of Land Management (BLM) is obligated to evaluate nominated lands, usually through a public process. A lease sale is held at the conclusion of that process. Once a company has a lease, the next step is to get a drilling permit. Because of how the outdated rules are written, it’s very hard for BLM to say “no” at this point and refuse to issue the permit, regardless of potential impacts on other values and our climate.
Production & Lost Royalties
- Despite a short pause in federal leasing in 2021, oil production on federal public lands has not been interrupted during the Biden administration and is now at its highest level since at least 2003.
- While oil and gas companies continued producing oil and gas from our public lands during the pause, they did so under a century-old royalty rate that for decades hadn’t been providing taxpayers with their fair share. Under the outdated 12.5 percent royalty rate, taxpayers lost out on billions of dollars in additional revenue that they should have received from the oil and gas industry’s use of our public lands.
- The Inflation Reduction Act’s long-overdue increase to the federal onshore royalty rate will now ensure that taxpayers receive a more fair return for the drilling that occurs on public lands. DOI must require a 16.67 percent royalty rate for any new leases that are sold in upcoming and future lease sales, along with requiring the updated rental rates and minimum lease bid that were also secured by the IRA. In its rulemaking, DOI must ensure regular reviews and—when necessary—updates to each of these rates and fees, so that they continue to provide a fair return to taxpayers.
Drilling Permits & Taxpayer Reclamation Burden
- At the end of September 2022, the oil and gas industry had nearly 24 million acres of federal public lands under lease, nearly half of which—11.3 million acres—were unused and non-producing. Even while the federal leasing pause was in effect, oil and gas companies were still able to apply for drilling permits, and in the first year of the Biden administration, the Bureau of Land Management (BLM) approved 3,564 new drilling permits.
- Before production on any well begins, operators have to post a bond (like a security deposit) that can be used to plug the well and clean up the surrounding land in case the company goes bankrupt or illegally abandons the well. On average, it can cost up to $145,000 to reclaim oil and gas wells on federal lands—and much more for modern shale wells—and yet, due to inadequate federal bonding rates that haven’t been updated since the 1950s and 60s, BLM currently holds an average bond of only $2,122 per well. This means that BLM may have only $7.6 million to cover the clean-up costs for all of the 3,564 new wells approved for drilling in the first year of the Biden administration, even though it could cost as much as $517 million to fully reclaim them, leading to a massive bill for taxpayers.
- Federal bonding reform is desperately needed to ensure that oil and gas companies—not taxpayers—are held fully responsible for paying to clean up the wells that are drilled on public lands. Legislation such as the Oil and Gas Bonding Reform and Orphaned Well Remediation Act introduced by Senators Bennet, Hickenlooper, Heinrich, and others is key for establishing in statute new federal bonding requirements for our public lands. In its rulemaking, DOI must also do its part to make the necessary changes for holding the industry accountable to cleaning up after itself.
Companies Operating On Public Lands
- Nominations: The IRA implemented a new $5 per acre fee that is required for all lease nominations, but under the current rules, anyone can still nominate for lease any parcel on the 90 percent of western public lands that are open to leasing. And in order for the BLM to issue rights-of-way for wind and solar development, the IRA now—arbitrarily—requires the BLM to have offered for oil and gas leasing the lesser of either 2 million acres or 50 percent of the acreage nominated for lease sales within the past year. The BLM has stated that, with the IRA’s requirement of the new $5 per acre lease nomination fee, the agency will – going forward – no longer accept nominations that are submitted anonymously.
- However, the BLM does also plan to continue evaluating lands for lease that were nominated before the IRA, which means that hundreds of thousands of public lands acres that were nominated anonymously in recent years are now being considered for upcoming lease sales. Many of these nominations are speculative in nature, and the BLM’s continuing to include them in onshore lease sales results in poor management of our public lands. In its rulemaking, DOI must take steps to further cut down on speculation and prevent public lands from becoming tied up in unproductive leases that harm other, more valuable uses and resources – including by not considering in upcoming and future lease sales any parcels that were nominated before the IRA.
- Leases: The BLM’s opening up of 90 percent of western public lands to leasing—including the vast areas where there is little to no drilling potential—has resulted in the oil and gas industry stockpiling far more leases than companies ever actually use. The industry is currently sitting on 9.9 million acres of idle leases in the West, or 47.4 percent of all leases in the region. That land mass of idled leases, which is generating minimal revenues for taxpayers, is larger than Maryland and Delaware combined.
- Drilling Permits: In addition to millions of acres of idle leases that could be developed at any time, as of April 2023, the oil and gas industry has 6,755 approved, but unused, drilling permits on hand, over 93 percent of which are in the West.