Leasing

Quick Facts

Tactic 1: Defer Infographic

Check out the full Red Tape Nation series.

Obtaining a federal lease doesn’t mean an operator has a green light to drill–it’s just the first step in a long, expensive process fraught with bureaucratic red tape, delays, and lawsuits. In fact, it often takes ten years or longer to navigate the bureaucratic maze in order to produce on a lease with a ten-year term.

Leasing is a classic catch-22 situation where…

  • Government has created a cumbersome permitting and environmental review process that takes years to complete
  • Environmental organizations exploit the process to throw up legal roadblocks
  • Both turn around and blame the oil and natural gas industry for not diligently developing leases

A natural gas and oil lease is a definite maybe: maybe you'll...

  • Get through the myriad environmental analyses and regulatory hurdles
  • Get permission to drill
  • Avoid being held up by legal challenges from obstructionist groups
  • Find oil or natural gas

Standard Leasing Process

Here's how the standard leasing process should work:

  • The BLM completes an RMP, which designates the lands open for development and specific restrictions.
  • Operators evaluate lands and nominate parcels to BLM.
  • BLM evaluates the nominations to determine which parcels will be available for auction. Per the Mineral Leasing Act (MLA), BLM must hold at least four annual leases per state.
  • BLM publishes a lease notice, obtains public comments, evaluates protests, makes any necessary changes, and publishes a final sale notice prior to holding a public auction.
  • Winning bidders pay the bonus and first year’s rental, and per the MLA, BLM issues the leases within 60 days, initiating a ten-year lease term.

However, recent policies and actions have restricted public lands from productive, responsible energy development. For instance, leasing policies instituted in 2010 added three additional layers to the process, and whereas the leasing process used to take three to six months, it now takes 12 to 14 months. As a result, acreage offered for lease in the West declined 66%, acreage issued fell by 54%, and lease revenues dropped by 42%.

BLM justifies the policies by pointing to a reduction in protested parcels, but that is achieved only by deferring large numbers of nominated parcels. In order to get protest numbers down, BLM has simply avoided moving forward parcels with the least bit of controversy. For example, Wyoming BLM did experience a 73% drop in protests after the leasing reforms were enacted. However, at the same time it deferred 333% more parcels. Since deferred parcels can linger for years while BLM conducts additional analysis, the net effect is reduced access to energy on public lands. For parcels that do finally make it to auction, BLM often fails to issue the leases within the 60 day timeframe mandated by the MLA.

Western Energy Alliance Leasing Comments

Colorado

Montana

Nevada

New Mexico

North Dakota

Utah

Wyoming