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US drilling on federal and Indian lands surges in 2019

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US drilling on federal and Indian lands surges in 2019

Highlights

Drilling permit applications climb by 300%

New Mexico site of most new activity

Denver — Applications for permits to drill on federal and Indian lands have increased by more than 300% over the past two years with New Mexico and Wyoming receiving most of the attention in the Permian and Green River Overthrust basins, respectively, as producers target oil-rich basins.

US Secretary of the Interior David Bernhardt announced the Department of the Interior's Office of Natural Resources Revenue disbursed $11.69 billion in fiscal year 2019 from energy production on federal and American Indian-owned lands and offshore areas. This represents a $2.76 billion increase in comparison to fiscal year 2018.

New Mexico proved to be the biggest benefactor of increased federal and Indian land activity. The average rig count in the state increased by 11 year over year from 95 to 106, according to data by Baker Hughes. New Mexico received the highest disbursement in fiscal year 2019, and it is the greatest allocation received in the state's history at $1.17 billion.

States received $2.44 billion in disbursements, and more than $1 billion was disbursed to American Indian tribes and individual Indian mineral owners.

Permit processing has increased significantly under the new presidential administration. The Department of the Interior said it has implemented processes to streamline the application and approval process. The time needed to complete a permit under the previous administration took an average of 257 days, while it now takes 108 days to complete the processing, according to the Department of the Interior.

"The Department of the Interior and the Trump administration clearly recognize the importance of energy production, and work diligently with Wyoming to ensure exploration and development of natural resources is done in a manner that preserves our state's unique landscapes," said Wyoming Governor Mark Gordon.

However, as drilling increases on public lands, multiple presidential Democratic candidates have suggested a nationwide ban on hydraulic fracturing, a technique key to unlocking shale gas and oil.

"When presidential candidates talk about halting oil and natural gas leasing on federal lands, they're forgetting, or willfully ignoring, the fact that production on federal lands is the second largest source of revenue to the federal government after income taxes," said Kathleen Sgamma, president of the Western Energy Alliance. "The industry is also a major source of funding for conservation on public lands, all while disturbing less than a tenth of a percent of public lands. That's a balance that funds education and other vital services across the West while protecting the environment."

Gas production on Indian and federal lands has slipped steadily over the past decade. In 2005, combined gas production on Indian lands averaged 0.9 Bcf/d. It dropped to 0.7 Bcf/d in 2009, and averaged only 0.66 Bcf/d from 2014 through 2016, according to data from the Energy Information Administration. While it used to average 1.8% of US production in 2005, it now represents about 1%.

Onshore oil and gas public leasing acreage has increased by 5,000 acres to 102,219 acres over the past two years, according to the most recent US Bureau of Land Management data.

Wyoming, New Mexico and Utah lead the nation for gas production on Indian lands.

-- Brandon Evans, bevans@spglobal.com

-- Edited by Keiron Greenhalgh, newsdesk@spglobal.com