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Oil producers sound alarms over proposed new direction for public lands management


IPAA calls rule 'a policy shift of gigantic proportions'

Creates conservation leases seen as competition to oil, gas

BLM-managed lands account for 11% of US oil production

  • Author
  • Jasmin Melvin
  • Editor
  • Richard Rubin
  • Commodity
  • Natural Gas Metals

A possible fundamental change to how the US Bureau of Land Management oversees federal lands, with an emphasis on building resilience against climate change and preventing biodiversity loss, has put the oil industry on high alert over continued access to public lands for oil and nautral gas leasing.

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The proposed public lands rule, among other things, would level the playing field for conservation compared with other land uses, a move some worry could be detrimental to energy development.

The Interior Department insisted in a statement March 30 that the "proposal is consistent with strategies used by other state and federal land management agencies to ensure the federal government has tools and direction to identify areas in need of restoration or conservation, as well as the ability to encourage investments in public lands to help balance the impacts of development."

But Mallori Miller, vice president of government relations for the Independent Petroleum Association of America, contends "the administration is making a policy shift of gigantic proportions with this proposed rule by giving conservation equal footing to all other public land uses."

Currently, wilderness and historic lands must possess a strict set of characteristics to be afforded a conservation designation, Miller said in an email March 31. "There was never a choice between mineral extraction or conservation but now the door is open."

"This rule is a complete shift of mindset and priority that is not consistent with the way federal land has ever been managed since the 1800s," she asserted, adding that "this is incredibly concerning for any competing interests."

Rene Santos, manager of North America supply analytics at S&P Global Commodity Insights, said, for new prospective leases, the rule could mean the offering of much less acreage in the future.

"However, a restriction on the availability of new federal land leases for oil operations is not a major concern as most of the prospective acreage (mainly shale basins) has already been leased," he said in an email.

About a quarter of US oil production, roughly 3 million b/d, takes place on federal lands and waters. But less than half of that production, about 1.3 million b/d or 11% of total production, is on federal lands overseen by BLM while the other 1.7 million b/d comes from offshore leases administered by the Bureau of Ocean Energy Management.

Conservation leases

If finalized, the rule would add conservation to the drilling, mining and grazing purposes for which BLM leases federal lands. These conservation leases would allow leaseholders to perform restoration or mitigation activities that generate revenue for taxpayers, such as establishing carbon markets.

"This tool ... directly responds to comments from state and industry partners on the need for a reliable path on public lands by which to pursue compensatory mitigation to facilitate development projects," Interior said.

An Interior spokesperson said there would be no impact to how BLM operates the federal oil and gas leasing program and that regular onshore lease sales mandated by the Mineral Leasing Act and Inflation Reduction Act would continue to be held.

"The proposed rule would provide a decision framework for the BLM that would have land health assessments guide its work, including identifying appropriate areas for development," the spokesperson said.

However, Western Energy Alliance President Kathleen Sgamma called into question Interior's reliance on the Federal Land Policy and Management Act (FLPMA) to take such action.

"Obviously, we're going to be suspicious of such a rule out of this administration," she said in a March 31 email. "What's particularly concerning is the proposed rule introduces novel concepts beyond the authority granted in FLPMA."

She accused Interior of crafting the rule solely "to try to stretch the boundaries of the law."

For one, she argued that "there is no such thing as a conservation lease in FLPMA" as the law only spells out productive uses like grazing and oil and gas production in its definition of leases.

Further, the multiple use provisions of the law allow for the sustainable yield of oil and gas resources so long as those activities do not result in "undue degradation" of the land, meaning "there will be impact, but it must be minimized to only that necessary for the activity," Sgamma said. "Now BLM is introducing a concept of 'intact landscapes' that implies no impact."

"BLM would be legally vulnerable applying these new standards not contained in FLPMA," she added.

Climate vs. industry profits

Senate Energy and Natural Resources Committee Ranking Member John Barrasso, Republican-Wyoming, committed to "do everything in my power to stop this proposal," likening the decree to extremists' use of tree spikes in the 1980s to thwart responsible public lands management.

"Wyoming families depend on access to public lands for energy and critical mineral development, grazing, forest management, and recreation," he said in a statement. "The Biden administration's extreme unilateral action will kill multiple use. This is a clear violation of the law."

Illustrating the stark partisan divide in Congress, House Natural Resources Committee Ranking Member Raúl Grijalva, Democrat-Arizona, said Interior's decision was "especially welcome" in light of House Republicans pushing through a sweeping energy policy and infrastructure permitting bill "that gives away even more of our public lands to Big Oil for cheap."

"The mess that polluters have already created makes it clear that we need to guide public land management with sustainability and future generations in mind, not dirty industry profits," Grijalva said in a statement.

With oil and gas leasing authorized on 90% of BLM-managed lands, the Sierra Club said the proposed policy reforms would help achieve President Joe Biden's 30x30 initiative to conserve at least 30% of US lands and waters by 2030 to help stave off the worst effects of climate change.

"We hope that this process leads to a new BLM that puts the needs of the climate and species ahead of profits for the oil and gas industry," said Athan Manuel, director of Sierra Club's Lands Protection Program.

Once published in the Federal Register, the proposed rule will be subject to a 75-day public comment period. Interior also said it would host five information forums to discuss the details of the rule.