A collapse in oil and gas leasing on federally-owned land in six Western US states is costing the US economy jobs and federal royalties as well as limiting access to domestic energy resources, a recent oil industry backed study says.
The number of new leases issued by the Bureau of Land Management is down 44% from the 2007-2008 period to the 2009-2010 period. There was a slight uptick in leasing activity in 2011, but the American Petroleum Institute, which released the study says that much of the leasing last year was double-counting and actual new leases hit a low last set in 1984.
“The balance of the evidence suggests a systematic decline of energy production activity on the nation’s federal lands in the last two years,” API said in its report, which covered oil and natural gas leasing activity in Colorado, Montana, New Mexico, North Dakota, Utah and Wyoming.
While the economic downturn in 2007 is part of the story in limiting new lease applications, the stabilization of private leasing activity in the past two years demonstrates that it is not just market factors slowing permitting, API says.
While the news that federal leasing activity has slowed would surprise many in North Dakota dealing with both the benefits and difficulties of a shale oil and gas boom there, API says the US is facing ongoing ramifications in terms of access to energy production and related jobs and royalty income if more federal, as opposed to private, leasing is not conducted.
“While federal leasing numbers have gone up and down due to a range of economic and regulatory considerations through the years, at no time in the last 25 years has the number of new onshore federal oil and gas leases been lower than the number of new leases issued in 2009 and 2010,” API says in its report.
Returning to a 2007-2009 level of leasing and permits would result in nearly 40,000 new jobs in the period to 2015, API says in a model that compares that outcome to the base case of existing trends. In an era of constrained federal budgets, severance taxes and federal royalties could climb to nearly $1 billion, the industry association says.
Photo Caption: BLM-managed land in California.