Editorial: Abysmal timing for BLM rule change
According to a BLM estimate, 375 billion cubic feet of natural gas was released through practices that include venting and flaring between 2009 and 2014. That's enough, the agency says, to supply 5 million households for a year. And the industry pays no royalties on that "fugitive" methane. It's an incredible waste of a precious public resource.
A few years after watching prices at the pump soar, we have seen technological advances in hydraulic fracturing and horizontal drilling that have transformed the United States into the world's leading oil and gas producer.
Some of that ingenuity should be applied to making natural gas extraction more efficient. The benefits would come to both the public, through increased royalties, and producers, who will have more product to sell. Requiring those efficiencies also would create new entrepreneurial opportunities, which some forward thinking businesses already are pursuing.
Unfortunately, the technological improvements that have made the United States a leader in oil and gas production have also contributed to a glut of those products, driving prices down. Complicating matters are Iran's plans to ramp up production after sanctions were lifted as part of the nuclear agreement, and Saudi Arabia's decision not to cut production.
The Saudi plan is to drive marginal American shale oil producers — which includes San Juan Basin companies — out of business.
Well, it's working. Thousands of San Juan Basin oil field workers have lost their jobs.
So, last week BLM officials traveled to Farmington to present their plan to an understandably hostile crowd.
One effect of the proposed changes would be to ensure wells producing smaller amounts of natural gas are taken out of service. When operators don't produce from their wells, they ultimately lose their leases. Then the wells are plugged and abandoned. Once a low producing well is abandoned, it is unlikely it will be restarted.
That means no royalties and no profits from wells producing on BLM land, which would mean no royalties for the government. These new rules could cost the government millions in lost royalties.
The research required to find affordable new technologies and methods for more efficient natural gas extraction likely won't provide immediate financial returns. And the current cutting-edge technology probably won't find its way onto low-producing wells. It's an unfair burden with predictable consequences.
We would support federal research in this area. The investment of taxpayer dollars would have broad benefits — saving jobs, improving air quality and ensuring a fair return for a public resource. (We would have a similar take on renewable energy research.)
However, it will take investment from the industry to hammer out practical solutions. And our local companies, and others like them across the country, could be irreparably harmed before a cost-effective approach is found.
The prices of oil and gas will rebound. Even in the rosiest renewable energy scenario, it will be decades before we find reliable substitutes for the power produced from fossil fuels. Once the health of the industry improves, we will be more supportive of the proposed rule change.