Drilling on U.S. land in spotlight
Newly confirmed Interior Secretary Deb Haaland kicked off a forum Thursday on a review of energy development on public lands and waters by saying that “fossil fuels will continue to play a major role in America for years to come.”
However, Haaland, who signed off from the conference call after her opening remarks, said the Trump administration prioritized the extraction of oil, gas, coal and other minerals over all other uses of public lands.
“The potential impacts to people, water, wildlife and climate were deliberately ignored, something the courts continue to address. While some corporations profited, taxpayers were shortchanged and some Americans’ voices were not heard,” Haaland said.
The review of the federal oil and gas program is expected to include a look at whether the royalty rates that companies pay on minerals should be raised, the costs of abandoned wells and ensuring public input into decisions. New oil and gas leases on public lands are on hold while the Interior Department conducts the review as required by an executive order by President Joe Biden.
A report, which will include initial findings and recommendations, is expected to be released in early summer. Interior officials heard from academics and representatives of tribes, industry, conservation and environmental justice organizations.
The Biden administration has made combating climate change a priority, and public lands are a key front because millions of acres of the federally managed lands are leased for the mining of coal, oil, gas and other minerals. Nada Culver, Interior’s deputy director of policy and programs, said public lands were the source of 7% of the country’s domestically produced oil and 8% of domestic natural gas in 2020.
Public lands were also the source of nearly a quarter of all U.S. greenhouse gas emissions because of fossil-fuel development, which includes coal, according to the Interior Department.
Colorado is the country’s seventh-largest oil and gas producer. About 36% of the state’s lands are federally managed. Although oil and gas are produced on state and private land as well, Colorado, as most Western states do, has what’s called a checkerboard of land ownership. Private land can be mixed in with public land, so a well site could straddle both types.
“Because of the interlocking land and mineral ownership in the West, the leasing ban will affect existing projects awaiting adjacent leases,” Kathleen Sgamma, president of the Western Energy Alliance trade group said in an email.
Exploratory wells and analysis often determine that a well is best placed on unleased adjacent land or that wells on tribal or private land can’t avoid adjacent federal minerals, Sgamma added. “A federal lease is necessary in both these common situations to move forward with projects on existing leases.”
As a result, industry represen
tatives have said the hold on new leases could cost the West tens of thousands of jobs and billions in lost revenue.
Others counter that the industry is sitting on a large number of leases that aren’t producing.
The pause in new oil and gas lease sales is an opportunity to review programs that haven’t been modernized in decades and doesn’t affect new drilling permits or development on existing leases, Haaland said. It doesn’t affect tribal lands.
“Oil and gas companies have amassed thousands of permits to drill on 38 million acres of public lands and oceans, an area larger than the state of Iowa,” Haaland said.
At the end of fiscal 2019, there were 2.5 million acres under lease in Colorado, but only about 1.5 million acres in production, according to federal figures.
Higher mineral royalty rates, so-called “rental” fees and other costs, including reclamation bonds, could discourage companies from letting leases sit idle, said Mark Squillace, a professor at the University of Colorado Law School Getches-Wilkinson Center. The peracre rental fee is $1.50 for the first five years of a lease. The 12.5% royalty rate on public lands is generally lower than rates on private or state lands.
“What that does really is encourage speculation,” Squillace said.
Frank Macchiarola of the American Petroleum Institute disputed that oil and gas companies are stockpiling leases or permits. He said it takes several years of investment, engineering assessments and logistics to determine if a well is commercially viable. He also said a U.S. Geological Survey report found that oil and gas production on public lands accounted for less than 10% of the overall greenhouse-gas emissions.
Just before the Interior Department’s forum, API released its plan to address climate change. The plan includes a recommendation to put a price on carbon to help reduce climate-changing emissions.
Tribal representatives said they’re often on the front lines of the impacts from climate change and oil and gas development. Fawn Sharp is president of the National Congress of American Indians and the Quinault Indian Nation in Taholah, Wash. She said her tribe is involved in a $60 million relocation of a village because of the effects of rising sea levels and storms.
At the same time, Sharp said energy resources on tribal lands are vast and are critical to the economies of many tribes. She said whatever changes the administration makes, “the unique political and legal status of tribal nations and their citizens must be recognized.”