The public comment period closes soon on a major overhaul of oil and gas leasing rules.
Some changes proposed by the Bureau of Land Management simply codify elements of the 2022 Inflation Reduction Act (IRA). The proposal would raise royalty payments and minimum per-acre bids, as well as substantially increase bonding requirements for remediating abandoned well sites, among other changes.
Conservation groups and others say the changes are long overdue. A new report from the Center for American Progress think tank argues provisions of the rule would “help ensure that the companies profiting off public resources act as responsible stewards of those resources.”
On the current bond requirements specifically, report co-author Jenny Rowland-Shea called them “egregiously low,” substantially below a $76,000 per-well average for plugging and surface reclamation calculated in a 2021 academic publication. In 2019, the Government Accountability Office similarly found that “bonds are not sufficient to prevent orphaned wells in part because they
do not reflect full reclamation costs for the wells they cover.”
Kathleen Sgamma, president of the Western Energy Alliance, which represents oil and gas producers, said her group has “no problem” with the legislatively-mandated changes included in the rule. But given what she said was a very low rate of well abandonment, the sizable jump in bond amounts is not merited – and could strain smaller companies.
“Clearly it's not this huge problem that would require BLM to upend the bond market and to put, frankly, many small companies out of business,” she said. “Really only large companies can afford these types of cost increases when you layer in all of the additional costs that IRA put in on producers as well.”
“I don't know that BLM really wants to be in the business of ensuring that only large companies can operate on federal lands,” she added.
Sgamma said the alliance will formally submit its comments before the Friday, Sept. 22 deadline for public comments.
Click here to learn more about the rule, or to submit your own comments.
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