Is oil and gas leasing down on public lands, and does it matter? Here's the real picture.
The Western Energy Alliance (WEA) is a trade organization representing hundreds of oil and gas producers and related businesses. Last week the group issued a press release stating that there has been a decrease in oil and gas leases issued by the Bureau of Land Management (BLM) in Western States over the past five years. The group also made the point that royalty payments, which go to the U.S. Treasury, have also dropped, and claim that, if the trend continues, jobs will be lost.
We don’t dispute that leases have declined, but let’s look at what that really means. First, leasing is not necessarily a reflection of drilling activity, the price of oil or gas, the amount of oil or gas produced, the amount of royalties collected, the amount of land off limits, or other tangible measures.
Second, companies nominate parcels for leasing themselves, and have decreased the number of parcels they ask BLM to lease.
Third, companies have leased a lot of land that they have never drilled. When a company leases a parcel, it gets a 10-year lease, and it can renew the lease for another 10 years when it is expires by conducting some minimal operations on the land. So companies often lease parcels to maintain the option of drilling them, but never drill.
It turns out, more than half of federal oil and gas leases are “non-producing”—meaning that companies are not producing any oil or gas. Out of 46,000 leases, more than 25,000 are not producing. And out of roughly 37 million acres leased, 69 percent are non-producing.
What does this look like? My NRDC colleague Matthew McKinzie has created a great map to illustrate how many acres are leased, but not producing*:
WEA says that only 6.4 percent of the 700 million acres of BLM-managed mineral estate is leased for oil and natural gas development. But it turns out that most of the federal mineral estate has zero oil and gas producing potential, and a lot is off limits--like national parks. In reality, nearly 40% of accessible areas with oil and gas resources are already leased.
So why is industry complaining? Earlier this year, Secretary of the Interior Ken Salazar explained that, during the Bush administration, oil and gas companies were "the kings of the world," who got whatever they wanted. Agency staff were directed to do the industry's bidding, and America's public lands became a "candy store" for the oil and gas industry, where companies could "walk in and take whatever they wanted" during the leasing process.
As I’ve blogged previously, Secretary Salazar is taking steps to restore a sensible balance to management of our public lands, including comprehensive reviews of parcels that are proposed for leasing, more opportunities for meaningful public input, and a less conflict-oriented approach. Industry continues to complain that things have changed, but the changes are all for the better.
* the map is based on the latest data available from BLM, but may not be completely up to date.