Environmentalists demand higher rates for oil and gas leases, question Trump's policy

Study says millions of acres leased to oil and gas for minimum rate

Adrian Hedden
Carlsbad Current-Argus
  • 3.3 million acres of New Mexico federal land leased for $2 or less per acre
  • Enviros propose raising minimum bid to $10
  • Group formed to advocate for stricter public land protections

Millions of acres of public lands owned by the federal government are leased to the oil and gas industry every year.

But a pair of non-profit groups don’t think the American people are getting their money’s worth.

In a recent study from the Center for Western Priorities and Wilderness Society, 17.7 million acres were reported “locked up” by oil and gas leases across 10 western states.

And 32 percent of the leases or 5.7 million acres, the study read, were sold for the minimum bid of $2 or less per acre.

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In competitive lease auctions, companies are allowed to purchase land for oil and gas drilling at the minimum $2 per acre bid or buy unsold leases non-competitively by paying the first year’s rent and a fee, usually totaling about $1.50 per acre, the study read.

In New Mexico, about 29 percent of the about 3.3 million acres of federal land in New Mexico leased to the industry was sold for $2 or less per acre.

For the minimum competitive bid of $2 per acre, 27,824 acres were leased – only about 0.8 percent – but 931,884 acres or 27 percent of New Mexico’s total land leased for oil and gas was sold non-competitively at about $1.50 per acre, the report read.

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Kim Stevens, campaign manager at the Wilderness Society said the cost of leases must be raised and Congress should value the environment and conservation above the oil and gas industry.

The report proposed raising the minimum competitive bid from $2 to $10 per acre. 

“These maps show how the federal government’s outdated oil and gas leasing process is allowing industry to lock up our lands across the west for just a couple dollars an acre, forsaking valuable conservation and recreation for the public,” Stevens said.

“It’s time for Congress to end these outdated policies that put industry ahead of the taxpayers and the future health of the environment.”

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Robert McEntyre, spokesman for the New Mexico Oil and Gas Association said proposals to raise the minimum bid could actually reduce oil and gas' benefit to the taxpayer by driving investor interest away from New Mexico federal land. 

He said better efficiency in federal regulatory agencies such as the Bureau of Land Management and Department of Interior, increases in staff and quicker processing times for permits would better strengthen the return to the taxpayers from oil and gas operations. 

""The Center for Western Priorities has long taken an anti-oil-and-gas stance in their proposals," McEntyre said.

"This report really paints a distorted picture of what's going on in the basin. Not once has the Center advocated for more efficiency at the BLM and we think that would do a better job of capturing more revenue for American taxpayers."  

Since Congress last altered the leasing process in 1987, 42.1 million acres or 60 percent of oil and gas leases on federal land were sold at the minimum bid or non-competitively, per the study.

Almost half of the leases don’t produce oil and gas, per the study, with 47 percent sitting idle and only generating the per-acre fee for taxpayers.

In the last two years, the federal government offered more than 2.2 million acres for oil and gas development that failed to sell at an auction, thus available to industry for noncompetitive purchase at about $1.50 per acre, the report read.

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In New Mexico, 14 percent of the 3.3 million acres leased to oil and gas sit idle, the lowest in the 10 western states included in the study.

All of Oregon’s 172,759 acres leased by the federal government were idle, the study read, along with Arizona’s 13,088 acres.

Colorado had 921,832 acres idle, 41 percent of that state’s 2.2 million acres leased to the industry.

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“This administration can’t be trusted to protect America’s public lands, waters, and communities from the impacts of oil and gas drilling,” said Center for Western Priorities Executive Director Jennifer Rokala.

“The ‘lease everywhere’ approach we’ve seen only helps the former and future oil and gas clients of top Interior Department officials—it’s taxpayers that get shortchanged in this process.”

“For decades, the oil and gas industry has taken advantage of an outdated system tilted in their favor and against taxpayers and other land uses.”

McEntyre said the BLM's system of issuing permits and regulating oil and gas activity could be more efficient, and has made progress as the industry booms in the Permian Basin. 

He said modernized technology and infrastructure, decreasing permit processing times and adding more personnel would better maximize revenue than raising costs. 

"That's been the largest angst for the industry," he said. "When we're filing for permits, it just takes so long to do so. The administration is making progress. Leasing in New Mexico is very competitive and it's attracting revenue from investors."

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What are they recommending?

The study outlined eight recommendations for Congress to enact to earn more money from oil and gas leases and prevent the industry’s activities from putting the environment at risk.

  • Identify lands suitable for oil and gas leasing through comprehensive and inclusive planning processes, including robust public participation, instead of through industry nominations
  • End the practice of leasing lands with little to no oil and gas potential
  • Raise the national minimum bid from $2 per acre to at least $10 per acre, and establish a process for periodic updates to account for inflation
  • Eliminate noncompetitive leasing, instead allowing unsold parcels to be offered at a competitive auction in the future
  • Raise the annual rental rate from $1.50 per acre to at least $3 per acre, and establish a process for periodic updates to account for inflation
  • Raise the royalty rate for onshore oil and gas to match the federal offshore rate and leading Western states
  • Shorten the duration of the standard lease term and raise the bar for companies to have terminated leases reinstated
  • Before issuing a lease, require lessees to demonstrate a capacity of exploring and producing oil and gas

Trump's public land policy questioned by enviros

A coalition of environmentalist groups called for better protection of public lands from oil and gas development, citing President Donald Trump's recent efforts to allegedly rollback aspects of the Endangered Species Act, Antiquities Act and National Environmental Policy Act, per an Oct. 2 news release from Mighty Earth, which included more than a dozen groups nationwide. 

“The Trump administration has thrown open the doors to its friends and allies in the fossil fuel and mining industries,” said Amanda Hurowitz, a spokesperson for the coalition. “But today we are standing up on behalf of the large majority of people in this country who support protections for our public lands.”

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The Trump administration reportedly removed protections from more than 150 million acres across the country, the release read, while attempting to remove protections for 119 million acres of public waters, and areas previously protected due to cultural, ecological or recreational value. 

Almost 500 million acres of public land and water were offered by the Administration to the oil and gas industry, read the release. 

“The last thing people want is more public lands privatized, strip-mined, or destroyed,” Hurowitz said. “These are beautiful places that we want our children and grandchildren to enjoy. Handing them over to dirty industry just as we need to be addressing the climate crisis is both irresponsible and unpopular.”

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The group planned to begin a "grassroots" effort to influence public leaders and investors to oppose oil and gas operations on lands previously protected by federal law. 

“People value public lands and they support companies that do too," said Athan Manuel, director of public lands protection at the Sierra Club.

"There’s an opportunity now for corporations and financial institutions to speak for public lands with their actions—to make clear they won’t pursue dirty fuel development in special natural places.”

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Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.