The U.S. Congress made several updates to how federal lands should be leased for oil and gas activity, but dozens of conservation groups in our region say the Bureau of Land Management (BLM) has yet to finalize those updates.
The conservation groups sent a letter to the BLM on Monday, Feb. 27, asking the agency to finalize the reforms before the scheduled oil and gas lease sales this spring. In our region, about 350,000 federal acres will be up for auction in Nevada, Wyoming, Utah and New Mexico.
This past summer, Congress voted to get rid of non-competitive leasing, as part of a clause in the Inflation Reduction Act.
“What non competitive leasing is – or was – say there's a lease sale, and parcels go up for auction, “ said Meghan Riley, public lands and wildlife advocate with the Wyoming Outdoor Council, which is one of the groups that signed the letter. “And if there are no bids on a parcel, then it would have become available for non-competitive leasing, and a company could lease that parcel for super, super cheap rates, like rock bottom prices.”
That reform has not been finalized by the BLM, although it was included in aninstruction memorandum from this past fall that guides field offices on how to conduct future lease sales. However, the upcoming sale in Wyoming still states non-competitive leasing is allowed, albeit unlikely.
“If parcels do not receive the minimum competitive bid, they may be leased later as noncompetitive leases that do not generate bonus bids,” according to the draft lease sale environmental assessment. “In general, lease sales in Wyoming are highly competitive and parcels with high potential for oil and gas production regularly command bonus bids in excess of the minimum bid.”
There are several other reforms the BLM has not officially finalized yet, like increasing royalty rates on production, from 12.5 percent to 16.67 percent. Again, this is outlined in the instruction memorandum, but not finalized.
The groups are also advocating for other reforms, not passed by Congress. One would increase the deposit companies have to pay for future reclamation of oil and gas sites – this is something called a bond.
“It's no different than a security deposit, right?,” Riley said. “It's the oil and gas company is putting down some money, and they can get it back as long as they haven't left a mess behind when they're done drilling.”
As of now, companies pay a $150,000 bond that covers all sites nationwide – but some say it can cost that much to restore just one site. Several conservation groups petitioned the federal government last fall over the same issue.
But, those against the increase say that increasing bonds would make it too expensive to do business in Wyoming.
“To ask for so-called full cost reclamation is more of an effort to try to make it so expensive in Wyoming to do business that business will go elsewhere,” Pete Obermueller, the president of the Petroleum Association of Wyoming (PAW), told Wyoming Public Media in November.
Obermueller pointed to Wyoming’s successes with reclamation. According to the Wyoming Oil and Gas Conservation Commission, 4,713 orphaned well sites have been reclaimed in the last eight years. As for development on state land, Wyoming has increased the amount of bond money required of companies, and it also requires ‘full-cost bonds’ from high-risk companies.
“With respect to plugging and reclamation in Wyoming, we have a best-in-class program,” Obermueller said. “We already do it better than really anywhere else.”
The federal lease sales for Wyoming will be held in June.
