Biden Admin’s Proposed CO Energy Lease Restrictions Could Cost Thousands of Jobs
The Biden administration recently unveiled its latest blockade of oil and natural gas production on federal lands that could cost Colorado thousands of jobs over the next two decades.
In response to several “sue and settle” lawsuits from environmental groups attempting to stop all production on federal lands, the Bureau of Land Management released resource management plans last week that would lock up more than 1.5 million acres in Western Colorado from future development:
“In a draft supplemental environmental impact statement announced Thursday, the Bureau of Land Management (BLM) issued so-called resource management plans for its Grand Junction Field Office and Colorado River Valley field offices which oversee mineral leasing in the area.
“The proposal would restrict the two offices to leasing just 239,000 acres and 143,000 acres, respectively, for fossil fuel production, a total reduction of about 80 percent.” (emphasis added)
BLM said their proposal would likely reduce the number of active wells by about 541 in Grand Junction area over the next 20 years, while the Colorado River Valley would see 58 fewer wells.
In a statement to Politico, IPAA’s Mallori Miller pointed out the severe national and local economic consequences of the Biden administration’s latest effort to restrict production on federal lands:
“To the detriment of Coloradans and the American people, the Biden Administration continues its push to stop oil and natural gas development on federal lands. This move, which will drastically slash the number of wells, will have negative impacts for local economies and create unnecessary job losses as well as harm state and local revenues as royalties from production on federal lands are split between the U.S. Treasury and the state.”
This is an even further blow to a state that typically receives hundreds of thousands of dollars annually from its federal lands production, but has only had one lease sale under this administration – in June 2022 – and has yet to have any scheduled for 2023.
While the administration insisted this proposal is primarily intended to protect “low potential” lands from being developed, the action effectively also halts oil and natural gas exploration and production in regions that show strong future potential. As E&E News reports:
“But Kathleen Sgamma, president of the Denver-based Western Energy Alliance, said the proposed plan is aimed at removing oil and gas development from BLM lands, and will stop responsible energy development and other productive uses of the land.
“Sgamma also said BLM’s move in Colorado should be considered in concert with a public lands rule the bureau is working to finalize by year’s end that would ‘incorporate climate resiliency and restoration through conservation’ into managing the 245 million acres the bureau oversees.”
Moreover, the “low potential” designation does not take into account the potential for holistic economic development, and BLM’s own economic impact analysis suggests it could have a far greater impact than the administration wants to admit.
The agency’s economic impact statement acknowledged these proposed restrictions would cost more than 6,500 jobs and millions in lost labor income over the next two decades, according to the Grand Junction Sentinel:
“The proposal would have economic impacts, particularly in the Grand Junction area. The BLM projects that its proposal could mean the potential number of wells drilled within the Grand Junction Field Office over 20 years could be reduced by 541 based on its proposal, and 58 wells would be forgone within the Colorado River Valley office’s jurisdiction over that same time.
“The annual economic impact per well would be about 11 jobs, mostly resulting from indirect employment, and losses in labor income per well annually would exceed more than half-million dollars, the BLM says.” (emphasis added)
BLM’s proposal to block acreage in Western Colorado is the latest instance of mixed messaging from an administration that claims it wants energy companies to increase production in response to high oil prices.
In reality, the Biden administration’s actions when it comes to federal energy leases could curtail domestic energy production.
The administration in recent weeks also proposed increasing the royalty rate for new energy leases on federal land from 12.5 percent to 16.67 percent. This will invariably increase costs for producers and raise indirect financing costs, which will lead to less domestic energy production overall and higher prices for consumers.
Bottom line: BLM’s proposed resource management plan in Colorado is the latest instance of mixed messages from an administration that says one thing but does another when it comes to domestic energy production. Amid persistent inflation and high energy costs, the last thing the Biden administration should be doing is taking resources off the table and eliminating thousands of Colorado jobs.