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Oil wells on public lands in Wyoming. Bureau of Land Management

Air Pollution

Coming Soon: Review of our Broken Oil & Gas Leasing System

Originally published on NRDC Expert Blog.
 

Department of the Interior is poised to release a set of recommendations on how to reform its federal oil and gas leasing programs later this month. As we’ve previously written, the way we lease and extract oil and gas from our public lands and waters is broken, and our ability to stave off the worst impacts of climate change depends, in part, on fixing it now.

 

Methane flare at oil and gas well. Trudy E. Bell, 2015. Photo courtesy of FracTracker Alliance. Via NRDC

The result of this broken and outdated oil and gas leasing program is untold amounts of abandoned infrastructure leaking toxics onto land and into the ocean, the selloff of our public resources at a steep discount, and a worsening climate crisis. Interior must seize this moment to reform the leasing system and permanently extend the Biden administration’s moratorium to end new leasing on land and in the ocean.

WE’RE OFFERING FAR TOO MANY ACRES FOR OIL AND GAS LEASING UNDER A BROKEN SYSTEM

Of the almost 12 million acres of public waters under lease offshore, over 8.9 million (or 75 percent) of those acres are unused and non-producing. That lack of interest in development is also apparent in acreage offered for lease: the previous administration offered more than 78 million acres for lease, with only 5 million acres purchased. Similarly, federal public lands have historically been offered up at rates far beyond what oil and gas companies could ever actually use. According to the latest numbers, of the 26 million acres of public lands under lease, nearly 14 million (or 53 percent) of those acres are also unused and non-producing—locking out other possible uses including outdoor recreation and critical ecological restoration. As with offshore acreage, even the current state of over-leasing underplays just how out-of-control the situation had gotten: during the Trump administration, only 24% of all offered leases sold, with the remaining 20 million acres remaining available for “noncompetitive” leasing.

This excessive nomination of lands available for leasing, in addition to the excessive acreage held under active leases, are emblematic of the issues with the federal oil and gas program. As Interior moves forward with essential reforms, they must address:

  • Insufficient bonding requirements that are leading to an orphaned well crisis on land and beneath our oceans;
  • Abnormally low royalty rates that are minimizing taxpayer returns for publicly owned resources;
  • Missing pollution control requirements that are leading to massive methane leaks;
  • Making sure climate risk is adequately considered in the offshore leasing program;
  • Acknowledgement that what “best meets national energy needs,” as required in the offshore five-year leasing program, is not more leasing; and
  • The wasteful practice of noncompetitive leasing that casts a pall over alternative uses of federal resources and leads to the sale of rights to public lands at bargain basement prices.

FEDERAL OIL AND GAS ACTIVITIES MUST BE CONSIDERED ALONGSIDE CLIMATE REALITIES

The review of the on- and offshore oil and gas programs is coming at a pivotal moment in the climate crisis. Not only is there a mounting body of evidence that warming is accelerating toward dangerous tipping points, but major energy policy models are also increasingly showing that we must stop developing new fossil fuel resources immediately. Using its scientific management mandate, Interior must follow the science and be guided by climate and energy experts, who have laid out the imperative that any action moving forward must help end our use of fossil fuels and enhance the resilience and health of ecosystems that play critical roles in limiting the worst impacts of climate change.

ENDING LEASING OFFSHORE WILL HAVE CLIMATE AND ENVIRONMENTAL BENEFITS

Industry is claiming that ending new leasing offshore will cost local jobs, impede national security, and devastate local economies. That couldn’t be further from the truth. Offshore production in the Gulf of Mexico is set to increase over the next year, even without new lease sales. And over the next decade, industry research consultancy Rystad Energy projects that a ban on leasing that lasts two presidential terms would only decrease offshore production in the Gulf of Mexico by about 14 percent by 2030 compared to reference case projections. As for energy security, it’s not too convincing that our national security depends on the oil we‘re producing when the Gulf Coast already exports double the amount of crude it imports.

BP oil spill-fire
Justin Stumberg/U.S. Navy

The offshore oil and gas industry is shedding jobs, but that’s due to low oil prices, not regulations. In 2015, more than 100,000 workers in Texas and 18,000 workers in Louisiana lost their jobs when oil prices crashed. Employment slightly recovered, only to be hammered again by the COVID-induced downturn during which 52,000 workers in Texas and 7,100 workers in Louisiana lost their jobs. Overall, oil and gas employment at the end of 2020 was around half what it was in 2015 in Texas and Louisiana, even though offshore production increased over that time period.

And we have barely learned the lessons of the Deepwater Horizon blowout – a spill of its size or larger could easily happen again. Meanwhile, thousands of the abandoned and orphaned wells in the Gulf of Mexico are currently leaking methane and other toxins into our ocean. Investing in sustainable and clean solutions is an opportunity for coastal communities to mitigate the environmental risk that comes with offshore drilling and keep our climate goals within reach.

FEDERAL PUBLIC LANDS CAN SPEED THE ENERGY TRANSITION AND FIGHT CLIMATE CHANGE

For too long, the dominant use of our federal public lands has been fossil fuel extraction. Despite a multiple-use, forward-looking management mandate, Interior has historically done little to slow the spread of oil, gas, and coal development across the public estate. Today, that means numerous iconic species are edging toward extinction, groundwater is polluted, methane is leaking at record rates, and communities continue to suffer from the boom and bust of global fossil energy markets.

Industry attempts to cloud this reality by using scare tactics to deflect from realities on the ground. Their claims, meant to stir up emotional responses and avoid any critical examination of reality, amount to, at best, gross exaggerations. The basic fact is that states dependent on oil and gas, and specifically states dependent on federal oil and gas, are facing an energy transition with very little policy in place to protect the workers and communities who will be most deeply affected. As the pace and scale of the energy transition accelerates—as it must if we hope to have any chance of avoiding the worst impacts of climate change—the way we think about and use public lands and the benefits they can provide must change.

Oil wells on public lands in Wyoming.
Bureau of Land Management

 

What does this look like? Across all the states where federal oil and gas leasing is most prevalent, job growth is not coming from the oil and gas sector. Jobs tied to recreation, services, healthcare, and IT have enjoyed steady growth, while oil and gas jobs make up just a tiny and diminishing fraction of overall employment. Meanwhile, attention is turning to responsibly siting more renewable energy projects on federal public lands, a move that some estimate could generate tens of thousands of new jobs in the very near term. More broadly, the rapid increase in renewable energy deployment throughout western states is estimated to be a strong driver of job growth for decades to come.

Undoubtedly, states, counties, and cities whose budgets may be overly dependent on fossil fuels need more than just job growth to successfully navigate the energy transition. That’s where state governments and the federal government must rise the challenge, pursuing forward-looking policies that don’t doom fossil-dependent communities to an energy transition that will leave them behind. Doing so can help ensure economic stability and diversification to allow these areas to emerge more resilient and prosperous than before.

A FUTURE FOR OIL AND GAS WORKERS AND ECONOMIES CAN START NOW

Oil and gas jobs come and go in boom-and-bust cycles. We owe it to workers to invest in job programs that sustain jobs over a longer term, and in industries that don’t contribute to devastating climate change and degradation of our lands and ocean. The American Jobs Plan proposed by the Biden administration contains several programs that will create good-paying jobs for these workers immediately. Key programs include:

  • Funding to plug orphaned oil and gas wells on state and federal public lands and waters—an effort that could lead to tens of thousands of jobs, deliver major benefits to local air and water, and significantly reduce climate destroying methane emissions;
  • Tax credits paired with strong labor standards for clean electricity to put us on the path to a carbon-free power system by 2035;
  • Investment in transportation infrastructure, including funding to build out our electric vehicle charging network and supply chain to make cars that can run on clean power – rather than dirty oil – more accessible to everyday Americans; and
  • Funding to upgrade drinking water infrastructure, including to replace all lead pipes in the country to ensure that drinking water doesn’t result in lead poisoning.

Our future is not in fossil fuels. The technologies and policies we need to transition our economy to clean energy exist today and manufacturing and constructing our energy future can drive employment and economic growth in a way that is sustainable and not tied to the further destruction of our global climate. When Department of Interior releases their interim report on oil and gas in the coming weeks, we hope to see a forward-looking document and plan that focuses on a clean energy future.

 
Written By

EXPERT BLOG @ NRDC The latest opinion and analysis from NRDC’s science, legal, and policy experts.

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