Oil leasing and permitting to get national forum March 25 - Albuquerque Journal

Oil leasing and permitting to get national forum March 25

Copyright © 2021 Albuquerque Journal

A pump jack east of Carlsbad in Lea County in 2019. (Eddie Moore/Albuquerque Journal)

The U.S. Interior Department is appealing directly to the public for input on potential changes to policies governing leasing and permitting for oil and gas development on federal lands.

The department will host a virtual forum March 25 with representatives from industry, labor, environmental groups and more to gather feedback for an “interim report” to be released this summer, the department said Tuesday morning. The report will include initial findings on the government’s current energy programs and policies, with recommendations on ways to improve federal stewardship of public lands and waters as President Joe Biden’s administration works to transition the country to a clean-energy economy, said Laura Daniel-Davis, Interior’s principal deputy assistant secretary for land and minerals management.

“The federal oil and gas program is not serving the American public well,” Daniel-Davis said in a statement. “It’s time to take a close look at how to best manage our nation’s natural resources with current and future generations in mind.”

Environmentalists welcomed the announcement as a sharp break from the past, allowing the public to weigh in on federal policies they say have, until now, been developed largely by industry lobbyists and Washington, D.C., insiders. Those groups will push for wide-ranging changes, including higher royalties and fees on oil and gas development, more land put into conservation or dedicated to outdoor recreation and renewable energy, and more industry accountability for impacts on the environment and public health, said Mary Greene, public lands attorney for the National Wildlife Federation.

“We’re very happy the Interior Department is reaching out to hear from a diverse set of stakeholders,” Greene told the Journal. “It’s a nice change. We haven’t seen real public engagement on these issues in years.”

New Mexico Oil and Gas Association Executive Director Ryan Flynn said that producers will likely disagree with many changes pushed by environmental groups but that they’re open to dialogue.

“Changes in government administrations bring changes in policy, and that’s expected,” Flynn told the Journal. “… Communication, discussion and transparency – we’re all for it. That’s a good thing.”

Industry response

In fact, industry is generally not concerned about a pause on new leasing activity on federal lands – which Biden ordered in January to give Interior time to fully review policies and regulations going forward – as long as it’s a short-term action that ends in a few months.

“If that order goes on for a long time, say a year or more, it could create major issues,” Flynn said. “But for now, it’s not really a concern.”

However, a separate Interior Department order in January that prohibits local Bureau of Land Management officials from issuing new federal drilling permits for 60 days is creating major disruptions in New Mexico operations, Flynn said.

Producers worry that order could extend beyond 60 days. And it’s already impacting daily operations, because BLM officials must now send simple requests, such as right-of-way approvals needed for existing permits, to Washington, D.C., for processing.

Flynn said the government should immediately rescind the restrictions on BLM authority.

“The Interior Department should be capable of doing two things at once: carrying out a pragmatic review that Biden has called for while at the same time continuing to do their job through BLM field offices,” Flynn said. “Those things aren’t mutually exclusive, and there are direct consequences for New Mexico from the Interior Department’s order.”

Long-term impact

As for Biden’s policy review, New Mexico could face significant long-term consequences if leasing and permitting regulations are overhauled, because most oil and gas production here takes place on federal lands.

The state accounts for 57% of all oil and 31% of all natural gas produced onshore on federal land in the U.S.

And with about one-third of government revenue tied directly to the oil and gas industry, New Mexico could be hit hard by any major restrictions on access to federal lands in the long term.

The Interior Department says that industry has stockpiled millions of acres of leases on public lands and waters but that the majority of those leases aren’t yet producing anything. Interior wants more public input on land management and leasing decisions, measures to address cleanup and remediation costs, and a “fair return” to taxpayers for use of public resources.

Environmental and public advocacy groups have pushed for years to raise royalty rates for onshore oil and gas production on federal lands, which have been stuck at 12.5% since 1920, when the federal Mineral Leasing Act was approved. That compares with 18.75% the federal government charges on offshore production.

The Washington, D.C.-based Taxpayers for Common Sense says the federal government would have earned about $12.4 billion more over the past decade if the land-based rate matched the offshore rate, including at least $5 billion more from production in New Mexico. And because states receive half of all royalty revenue, the state could have earned about $2.5 billion more over the same period.

Environmentalists also want to raise land rental fees, minimum bid amounts to obtain leases, and bonding rates for cleanup and remediation. A number of bills have been introduced in the U.S. Congress to do those things, some with bipartisan support.

Industry says lower royalty rates and fees help compensate for higher costs of producing on federal lands because of regulatory burdens.

“The regulatory process, the number of hurdles, and the time it takes to develop operations on federal lands is much greater than on state or private lands,” Flynn said.

Meanwhile, Gov. Michelle Lujan Grisham’s administration has yet to publicly state its position on the issues.

The Energy, Minerals and Natural Resources Department asked Interior in February to clarify its recent 60-day pause on local BLM permitting authority, citing industry uncertainty caused by the order. EMNRD Secretary Sarah Cottrell Propst and staff from the governor’s office met virtually with Interior representatives Tuesday afternoon, but they didn’t disclose conversation details.

“The meeting provided a productive space to discuss New Mexico’s unique position as a major oil and gas producer on federal lands with a strong track record of success addressing climate change,” EMNRD spokesperson Susan Torres told the Journal in an email. “We appreciate the administration’s willingness to work with New Mexico going forward.”

Editor’s Note: An earlier version of this story gave incorrect information about the amount of oil and natural gas New Mexico produces. The state accounts for 57% of all oil and 31% of all natural gas produced onshore on federal land inside the U.S. The story has been corrected.

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