Biden Administration Hikes Fees for Oil & Gas Drilling on Public Lands

Reforms Aim to Boost Returns and Address Environmental Concerns

by Victor Adetimilehin

The Biden administration on Friday unveiled a series of reforms designed to increase revenue generated from oil and gas drilling on federal lands, while also addressing environmental concerns. The new rules, finalized by the Bureau of Land Management (BLM), will require oil and gas companies to pay significantly higher bonding rates to cover the cost of plugging abandoned wells. Additionally, lease rents, minimum auction bids and royalty rates for extracted fuels will all increase under the new policy.

These reforms come after years of criticism from environmental and taxpayer groups who argued that the federal oil and gas leasing program was not delivering a fair return to the public. The new rules also limit drilling in ecologically sensitive areas and culturally significant sites.

“These are the most significant reforms to the federal oil and gas leasing program in decades,” said Interior Secretary Deb Haaland in a statement. “These changes will cut wasteful speculation by industry, increase returns for the American people, and ensure that taxpayers are not left holding the bag for environmental cleanups.”

Industry Pushback

The oil and gas industry has voiced opposition to the reforms, arguing that the higher costs associated with drilling on federal lands will make the U.S. more reliant on foreign oil supplies.

“Overly burdensome land management regulations will put this critical energy supply at risk,” said Holly Hopkins, vice president of upstream policy at the American Petroleum Institute, an oil and gas industry trade group.

The Biden administration has defended the reforms, arguing that they are necessary to ensure a fair return for the American people and to address the environmental impact of oil and gas drilling. The Inflation Reduction Act (IRA), a landmark climate change law passed in 2022, effectively guarantees continued drilling rights auctions on federal lands for at least another decade. However, the IRA also included provisions aimed at reducing the environmental impact of drilling.

Environmental Groups Split on Reforms

Several environmental groups praised the BLM’s reforms, saying they would make oil and gas companies more accountable for cleaning up abandoned wells. However, some environmental groups argued that the reforms do not go far enough to address the climate impact of drilling on public lands.

“While we support the BLM’s efforts to curb financial giveaways to Big Oil, this rule fails to confront the massive tide of climate emissions stemming from its leasing program,” said Nicole Ghio, senior fossil fuels program manager at Friends of the Earth.

The new rules are expected to take effect later this year. It remains to be seen how they will impact oil and gas production on federal lands, as well as the overall price of energy in the United States.

Source: Reuters

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