American Oil and Gas Reporter - August 2023 - 27

BLM Rulemaking Aims To
Expand Obligations For
Projects On Federal Lands
To provide a " balanced approach to development, " in late
July, the U.S. Department of Interior released a laundry list of
regulations for oil and gas leasing on public lands. Unfortunately,
the proposal is only the latest attempt by the Biden administration
to sideline critical energy development.
In the past year, the administration repeatedly has pushed
mixed messages about American production, referencing false
claims of unused permits and slow-moving operators. The truth
is, the industry continues to responsibly produce the energy on
which hardworking American families depend. By increasing
the cost to operate, the administration is erecting unnecessary
roadblocks for maintaining reliable, low-emitting and affordable
energy. My colleague Dan Naatz, chief operating officer and executive
vice president at the Independent Petroleum Association
of America, summarizes it well.
" 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, " he explained to the Washington Post. " 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, " he added. " The goal is to produce. "
The American Petroleum Institute's Holly Hopkins echoes
these concerns:
" Amidst a global energy crisis, this action from DOI 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 seeks to increase:
* Bond rates from a minimum of $10,000 to a minimum of
$150,000;
* Royalty rates paid by operators on public lands from
12.50% to 16.67%; and
* Minimum lease bids at auctions from $2 to $10 an acre.
Bureau of Land Management Director Tracey Stone-Manning
claims the proposal " aims to ensure fairness to the taxpayer
and balanced, responsible development as we continue to transition
to a clean energy economy. " However, Western Energy
Alliance President Kathleen Sgamma questions the underlying
assumptions.
" 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, " she counters. " 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. "
More importantly, domestic oil and natural gas production is
needed worldwide as consumers still grapple with the global energy
crisis. Further Biden administration roadblocks will hurt
the industry and the communities most reliant on U.S. resources.
" The BLM's proposals reflect a basic
disregard for the challenges producers face
in assembling drilling packages when they
operate on federal lands.
"
House Natural Resources Chairman Bruce Westerman, R-Ar.,
deems the proposal " out of touch " with " the needs of our constituents
and the wider world. " He observes that the country is
" 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's proposals reflect a basic disregard for the challenges
producers face in assembling drilling packages when they
operate on federal lands. As U.S. independents know, companies
must work not only with the federal government, but also states
and private landowners. Operators pay ever-increasing rents on
federal lands leasing as they assemble drilling frameworks and
submit complex environmental stewardship plans, but the Biden
administration continues to up the ante in an effort to reduce production
despite growing energy needs. The administration's
claims of a " balanced approach " will add burdensome costs that
can discourage future investment at a time when the United
States is a trusted global leader in energy production.
The BLM has provided 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. The
team at IPAA opposes the proposed changes and certainly will
push back against the rule. Our members operating on federal
lands are encouraged to reach out to us about how the rule is
likely to impact them.
❒
JEFF ESHELMAN is president
and chief executive officer of the Independent
Petroleum Association
of America and the founder/executive
vice president of Energy in
Depth. Along with more than two
decades at IPAA, he previously
worked at the Defense Logistics
Agency, the White House Office of
National Drug Control Policy and
three public affairs firms.
AUGUST 2023 27
American Oil and Gas Reporter - August 2023

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