Fees and rates paid by oil and gas companies that use public lands in New Mexico and across the US to drill for fossil fuels could be raised by the federal government via a rule proposed Thursday.
The proposal by the Bureau of Land Management sought to codify higher royalties and rental rates operators pay to drill on federal land, drawing a mixed reaction from environmental groups in New Mexico where most fossil fuel development occurs on public land.
The Bureau of Land Management proposed Thursday to revise its oil and gas leasing system, raising royalty rates for federal land leases to 16.67 percent from the previous rate of 12.5 percent, and establishing the new rate as the minimum after Aug. 16, 2032.
The BLM also sought to raise bonding requirements to $150,000 for single leases and $500,000 for leases statewide, money paid by operators and used by the government to clean up wells should they be abandoned.
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The agency argued the current minimum bonding rate of $10,000 was “no longer adequate” to cover the costs, read a BLM announcement of the proposal.
Minimum bids in federal land lease auctions would be raised under the proposal, and expressions of interest filed by oil companies to add tracts of lands to auction would incur a fee of $5 per acre.
This came as the BLM planned to offer more public lands in New Mexico for leases to oil companies, with an auction scheduled for November to offer about 433 acres for oil production in Eddy and Lea counties.
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Page Knight, senior research and policy analyst at New Mexico Voices for Children said during a Friday press conference that the increased bonding and royalty rates were needed action to hold the industry accountable.
Higher royalties and rental rates, he said, would provide American taxpayers with fair returns for access to publicly owned natural resources.
“We were all taught at a young age then we made a mess, we needed to take responsibility and clean up after ourselves. These reforms are especially important because we know orphaned wells and infrastructure threaten the help of our families and communities,” Knight said.
“We know that updating the federal royalty and rental rates is an important step to make sure the oil and gas industry pays its fair share.”
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Melissa Hornbein, senior attorney with the Western Environmental Law Center questioned the proposal as lacking any directive to phase out oil and gas production she said was driving a “climate crisis.”
“Following months of consecutive climate disasters, the Bureau of Land Management’s determination to rearrange deck chairs instead of deploying lifeboats is deeply disturbing,” she said.
“Coming from an administration that kicked off its tenure with some of the loftiest climate rhetoric of any government on the global stage, the Interior’s obdurate reaffirmation of the status quo is staggering.”
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Jamie Williams at the Wilderness Society said the rule would help move the federal government toward a priority for conservation, rather than the economic benefits brought by fossil fuel markets.
The BLM’s proposal did contain language intended to shift oil and gas operations away from sensitive, unused areas and consolidate operations in locations already being used.
““For far too long, federal public land policies have prioritized fossil fuel companies’ profits at the expense of communities’ wellbeing and public lands themselves,” Williams said.
“The proposed Oil and Gas Rule is an important step towards the BLM taking a more holistic conservation, climate and community-centric approach to managing public lands.”
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In a statement, BLM Directory Tracy Stone-Manning said the updated rules would provide a better return for taxpayers from oil and gas operations on federal land, and a pathway to shift the US toward lower-pollution.
“This proposal to update BLM’s oil and gas program aims to ensure fairness to the taxpayer and balanced, responsible development as we continue to transition to a clean energy economy,” said Stone-Manning. “It includes common sense and needed fiscal revisions to BLM’s program, many directed by Congress.”
The American Petroleum Institute (API), a national oil and gas trade group, opposed the reforms and described them as a “barrier” to US energy development.
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“Amidst a global energy crisis, this action from the Department of the Interior is yet another attempt to add even more barriers to future energy production, increase uncertainty for producers and may further discourage oil and natural gas investment,” read a statement from the API.
“This is a concerning approach from an administration that has repeatedly acted to restrict essential energy development.”
In a poll released Wednesday by the API and conducted by Morning Consult of 2,003 registered voters nationwide showed 90 percent of respondents believed oil and gas production was important to the US economy.
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Another 85 percent of those polled believed oil and gas produced in the US made the nation more secure against adversaries like China and Russia.
API CEO Mike Sommers said the poll indicated Americans largely supported the domestic fossil fuel industry and policy that would support its growth.
“American voters understand and support the critical role the natural gas and oil industry plays in powering our nation’s economy,” he said. “It’s time for Congress and the administration to build on recent momentum and continue to drive improvements to our permitting process that enables American energy to serve as a foundation for long-term economic growth and energy security.”
Adrian Hedencan be reached at 575-628-5516,[email protected] or@AdrianHedden on Twitter.