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Number of Energy Leases on Federal Land Continues to Fall

The Law Office of C. William Smalling, P.C. April 20, 2016

What Is the Obama Administration's Position on Drilling on Federal Lands?

The Bureau of Land Management (BLM) recently released data showing the number of oil and natural gas leases on federal land fell last year, continuing a trend that began in 2008. Moreover, the number of unused drilling permits is at an all time high.

Reasons for Falling Energy Production

Some observers argue that the Obama Administration is squandering the shale renaissance by not promoting drilling on U.S. lands. The White House argues, however, that energy producers are not using existing drilling permits on lands available for oil and gas development. Nonetheless, the data reveals substantial production declines since the shale energy boom began. For its part, the BLM contends that some of the decline can be attributed to the dramatic fall in energy prices since 2014.

In response, energy sector advocates believe the White House is at fault because leases are being offered on lands that draw little interest from producers. The BLM has made millions of acres available in remote unproven areas of Alaska, while lands in the Rocky Mountain States, with vast reserves, remain untapped. Moreover the BLM approves permits far more slowly than states, some of which take years to be processed. In short, the permits are not adequately aligned with drilling activity. Finally, other federal agencies have been denying lease permits in other regions.

Regardless of whether or not leasing permits are being granted by the Administration or have been left idle by producers, the total number of producing leases on federal lands continues to decline dramatically.

U.S Forest Service Nixes Leases in the Bridger-Teton National Forest

In a related development, the U.S Forest Service recently announced that oil and gas leasing in the Bridger Teton National Forest will not be allowed. While industry groups argued the drilling would be done responsibly, the decision is a victory for environmental advocates. The Forest Service was considering leases on 40,000 acres of land in the Wyoming Range.

“The Wyoming Range is one of those special places we need to protect today to ensure we pass on this legacy to our kids and grandkids” said Mike Burd, a spokesman for Citizens for the Wyoming Range.

This longstanding environmental dispute started in 2005 when oil and gas leases in Bridger Teton were first offered for sale. The intended sale was met with a huge pushback by environmental groups and citizens of the Wyoming Range and eventually prompted Congress to ban drilling on over 1 million acres of federal land in the area in 2009.

While the decision will not be final until October and the draft decision is open for public comment for 45 days, the decision will most likely close the book on drilling in the range. Meanwhile, energy groups continue to be concerned about the removal of federal lands from leasing and the potential for a continuing decline in production that will impede the oil and gas renaissance in the U.S.