FACTS: Big Oil CEOs Exploit Our Broken Leasing System. It’s Time For Change.

Contact: Emily Samsel, emily_samsel@lcv.org, 828-713-9647

In response to President Biden’s executive order today, we wanted to share some facts and figures in support of the new leasing pause for oil and gas on public lands and waters, pasted below.

Additionally, here is a quote attributable to LCV’s Conservation Program Director Alex Taurel, who is also available to discuss today’s climate actions from the White House:

“We’re glad the Biden Administration is stopping the reckless giveaways of the Trump administration that put the profits of corporate polluter CEOs before our health, and charting a new path forward so that our public lands and waters work for the people and local communities, not just polluter CEOs. It’s long past time to pause and review the broken leasing system that is enriching Big Oil while fleecing taxpayers, harming our majestic public lands and waters, worsening climate change, and polluting communities, often times communities of color and low-wealth communities. The Biden administration is right to review this program and ensure it aligns with the best interests of taxpayers, communities, our public lands, and our climate.”

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Why a Pause and a Reset is Necessary to Address a Broken Oil And Gas Leasing System

The past four years of the Trump administration have exposed just how deeply broken the public lands oil and gas leasing system is. For decades, the program has wasted agency resources, prioritized corporate profits over fair returns for taxpayers, shifted billions in orphaned well liabilities from industry to the public, and put important public lands, water, and wildlife at risk. Now is the time to pause leasing on public lands and conduct a programmatic review of the public lands leasing program. The oil and gas leasing program has failed to serve the public interest in a variety of ways, which is why a pause, programmatic review, and sweeping, top-to-bottom changes are sorely needed.

For years, the oil and gas industry has stockpiled and failed to use thousands of leases and drilling permits, wasting government resources and undermining multiple-use management.

  • The oil and gas industry has long maintained an overabundance of leases and drilling permits, which may look good to investors, but does not comport with good government.
  • Between FY09 and FY18, 63% of acres leased by industry was idle each year and not producing any oil or gas. And a recent GAO study found that industry was not utilizing nearly 10,000 approved drilling permits, an increase of at least 32% from just five years ago.
  • Additionally, companies routinely fail to pay rent on their leases, which are then terminated by the Bureau of Land Management (BLM). In fact, over a recent ten-year period, BLM had terminated well over half of all noncompetitive leases issued (over 1.6 million acres) and roughly 30 percent of all competitive leases issued.

Over three-fourths of public lands available for oil and gas leasing have little to no development potential, which breeds speculation, waste, and low returns for taxpayers.

  • As of 2016, about 90 percent of lands managed by BLM in the West – close to 200 million acres – were open to oil and gas leasing. Only 23 percent of BLM lands are considered to have a moderate to high potential for oil and gas development, however.
  • Because so many lands are available for leasing, industry floods BLM with an overwhelming amount of lease nominations each year. Between 2009 and 2018, the oil and gas industry nominated nearly 106 million acres of public lands for leasing – a land mass larger in size than the State of California.
  • Further underscoring the waste and speculation that is endemic to the leasing program, industry purchased just 20 percent of the 47.5 million acres offered for lease between 2009 and 2018. This drove a dramatic “surge” in noncompetitive leasing, which reached “the highest levels in over a decade” in 2018.
  • Noncompetitive leasing is a posterchild for government waste. Between 2003 and 2019, over 34 million acres of public lands were leased  noncompetitively – but taxpayers are getting little to nothing in return. According to a recent study from GAO, 99 percent of noncompetitive oil and gas leases issued between 2003 and 2009 never entered production in their primary 10-year term.

As “the boom” busts, orphaned well clean-up costs are skyrocketing and increasingly falling to taxpayers.

  • The number of oil and gas producers filing for bankruptcy is rising, which is only worsening the already-dire orphaned well problem in the U.S. There are currently about 57,000 orphaned wells throughout the country, and the Interstate Oil and Gas Compact Commission estimates that as many as another 746,000 wells may be orphaned as well.
  • It can cost upwards of $300,000 to plug a modern oil and gas well, but BLM requires companies to post a bond of just $10,000 per well. This rate is even less for companies that use national or statewide bonds, which can cover hundreds or thousands of wells.
  • According to GAO, BLM has just $204 million in reclamation bonds, though the cost to reclaim the over 96,000 producible oil and gas wells on public lands could exceed $6 billion. Cleaning up orphaned wells could therefore easily cost taxpayers hundreds of millions – if not billions – of dollars.
  • Orphaned wells are environmental hazards that threaten drinking water supplies, endanger wildlife, and serve as a significant source of methane pollution.

It is time for a review of the program that rebalances the priorities of our public lands and waters so they are part of the solution to tackling the climate crisis, including boosting appropriately-sited clean energy and preserving our lands for recreation and as carbon strongholds. 

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