The Federal Lease Message Wheel Goes Round and Round

For opponents of oil and gas development on federal lands, there are many opportunities to “spin the message wheel” to create confusion or claims against production.  One day, its complaints that oil and gas companies are “sitting on non-producing” federal acres, the next it’s statements that “nobody’s standing in the way” of oil production. Then, it’s accusations of “price gouging” or that oil companies are unpatriotic.

Unused leases or unused permits? What’s the difference?

One of the most popular methods used to create confusion is to claim that companies are “holding onto unused leases,” or “unused permits” on Federal lands.  The tactic is a favorite of anti-development activists and are often echoed by the Administration.

Even official White House facts sheets casually use obscure terms that have precise meanings to the industry and regulatory bodies.  “Right now,” they say, “the oil and gas industry is sitting on more than 12 million acres of non-producing Federal land with 9,000 unused but already-approved permits for production.”  But these facts sheets are aimed at political audiences, like some Members of Congress who repeatedly confused their constituents during the recent floor debate in the US House over HR 21, the Strategic Production Response Act (a bill designed to ensure that policymakers support production on federal lands before selling off our nation’s strategic oil reserves).

Terminology is important to ensuring accuracy – especially in public policies.  First, we need to clarify the difference between leases and permits. These are different terms, with different meanings that should not be confused.

    • A lease is an agreement between the federal government and an energy company that gives the company an exclusive interest to explore for and hopefully produce oil and/or natural gas on the land.
    • Once a leaseholder, operator, or designated agent identifies an oil and gas deposit on a federal lease, they can file an application for permit to drill (APD). That APD must then be approved and issued by the federal Bureau of Land Management.

Only 4 percent of Federal Lands have Oil and Natural Gas Development

In addition to oil and natural gas, federal lands are also used for the mining and exploration of critical minerals used in a variety of products, including renewable energy products.

Interestingly, oil and natural gas development only occurs on a small percentage of federal land, (4.2 percent) after agencies sell or auction off leases. Yet in 2021, oil production from federal lands provided 9.4 percent of total US oil production and 8.8 percent of US natural gas production.

75 Percent of Allocated Federal Land is Producing Oil and Natural Gas

When it comes to leases, facts are clear: the vast majority of leases on federal lands are currently producing oil and natural gas. Of the 37,496 federal onshore oil or gas leases, 75 percent are producing – “a greater share… than any other time in the past two decades.” These facts undermine any notion of producers “stockpiling” unused leases.

Currently, there are nearly 100,000 wells producing oil and gas on federal lands, it makes sense that other projects are awaiting exploration, are navigating an intensive regularly review process, are awaiting right-of-way clearances, or are intentionally delayed by litigation or lawsuits from third-parties or activist groups.  In fact, the Western Energy Alliance alone is current defending 2,200 of the 9,000 so-called unused leases that are under litigation.

Technological Advances Allow Operators to Produce More with Less

Between 2009 and 2019, the total number of the onshore acres leased by the government decreased more than 43 percent.  At the same time, production skyrocketed.  “In other words, technological innovations and efficiencies have yielded more production with less impact, meaning operators are producing much more with far less.”  So much for the “stockpiling leases” myth.

In addition to providing our country and the world with affordable and reliable energy to meet demand, production on federal land supports millions of jobs, supports national security, and funds critical public services like public education, first responders, and environmental conservation.  And, the extraction of oil and natural gas from federal lands accounts for just 0.6 percent of total US greenhouse gases (GHGs).

Permit Approval Delays are the Culprit

When we look at permits – which are different than leases since they cannot be secured until after a lease is in place – there are currently more than 4,600 permits to drill waiting approval.  The government could approve these permits more expeditiously, enabling companies to move forward with development, but restricting energy from federal land is the stated policy goal of the Biden administration. The lack of action on these permits could have devastating consequences in the long run, and the administration’s recently issued guidance on greenhouse gas emissions will add even greater delay, uncertainty, and legal vulnerability to energy projects on federal lands.

Supporting Production on Federal Lands is Key to Energy Security

Last year’s chaos in global energy markets is very likely to continue, as Russia’s aggression against Ukraine continues – as does their manipulation of global oil markets.  Policymakers in Washington should be clear that the surest path toward domestic – and global – energy security is here at home.

American oil and natural gas production, whether obtained from private lands or federal acres, should be the goal of a supportive, long-term energy strategy to support our security and energy needs. Instead of misleading claims about leases or permits, policymakers should know the facts: production from federal leases is a major input to the nation’s energy lifeblood and integral to everyday economic existence.  Without leases, prices would be far steeper and the world less secure.




← Back to Blog