DOI’s “Balanced Approach” for Oil and Gas Development Is Out-Of-Touch With Reality
To provide a “balanced approach to development,” the Department of Interior released a laundry list of regulations for oil and gas leasing on public lands. However, the proposal is the latest attempt by the Biden administration to sideline critical energy development.
In the past year, the administration has repeatedly pushed mixed messages on domestic production referencing false claims of unused permits and slow-moving operators. The truth is, the industry continues to responsibly produce energy resources that hard-working American families depend on. By increasing the cost to operate, the administration is placing unnecessary roadblocks for maintaining reliable, low-emitting, and affordable energy. As Independent Petroleum Association of America Executive Vice President Dan Naatz explained:
“The increases in the proposal are substantial, and will make it harder for smaller oil and gas producers to lease and drill on public land. It takes a lot of land and millions of dollars of investment to put together a drilling program, and companies need to be able to cobble that land together over time.
“I don’t know any company that just wants to speculate or just sit on leases. The goal is to produce.”
The American Petroleum Institute’s Holly Hopkins echoed these concerns:
“Amidst a global energy crisis, this action from the Department of the Interior is yet another attempt to add even more barriers to future energy production, increases uncertainty for producers and may further discourage oil and natural gas investment.”
The regulation would require, increased:
- Bond rates from a minimum of $10,000 to a minimum of $150,000.
- Royalty rates paid by operators on public lands from 12.5 percent to 16.67 percent.
- Minimum lease bids at auctions from $2 per acre to $10 per acre.
And while Bureau of Land Management Director Tracey Stone-Manning said the proposal “aims to ensure fairness to the taxpayer and balanced, responsible development as we continue to transition to a clean energy economy,” as Western Energy Alliance President Kathleen Sgamma explains:
“It’s a false notion that the onshore oil and gas program is beset with so many deficiencies and problems that these overarching rules are needed. No other program provides more royalty revenue and a higher return than federal oil and natural gas. Wind and solar provide next to nothing. For this administration, it’s never enough and more needs to be squeezed out of oil and natural gas companies.” (emphasis added)
More importantly, domestic oil and natural gas production is needed worldwide as consumers still grapple with the global energy crisis. Further roadblocks by the administration will negatively impact the industry and the communities that rely on U.S. resources the most. As House Natural Resources Chair Bruce Westerman (R-Ark.) said the proposal is “out of touch” with “the needs of our constituents and the world at large”:
“We are facing an ever-increasing demand for safe, reliable energy, which American oil and gas producers provide in more environmentally friendly ways than anywhere else in the world.”
The BLM has set two months for the public to send comments on the regulation, along with public meetings held in August and September as part of the consultation process.
Bottom Line: The Biden administration’s claims of a “balanced approach” would add burdensome costs that could disincentivize future investment at a time when the United States is a trusted global leader in energy production.