The Bureau of Land Management has fired up its oil and gas leasing system again in Montana. The restart follows a hiatus that was initiated last January when President Joe Biden placed a moratorium on federal oil and gas leasing while the White House reviewed the practice’s contribution to climate change. BLM’s regional office announced the new sale April 18, characterizing the move as a response to a federal court order that reversed Biden’s moratorium.
BLM Montana/Dakotas state office will auction leasing rights for 23 parcels spread across 3,406 acres during its June 28 sale. The parcels are located in Fallon, Powder River, Richland and Roosevelt counties in Montana and McKenzie, Mountrail and Williams counties in North Dakota. The sale represents a small percentage of all new leases that will be available for oil and gas development. Nationwide, roughly 144,000 acres spread across 173 parcels have been released for onshore sales.
The agency also said it’s raising the royalty rate to 18.75% “in keeping with rates charged by States and private landowners.” Federal royalty rates were one of the items prioritized for review by Interior Secretary Deb Haaland, who said, “For too long, the federal oil and gas leasing programs have prioritized the wants of extractive industries” in an April 15 release about Interior Department changes to the federal oil and gas leasing program. Other changes include prioritizing lease sales near existing leases and avoiding development along wildlife corridors and sensitive cultural areas.
President Joe Biden on Wednesday signed an executive order placing a moratorium on the leasing of federal land and waters for oil and gas development, making good on a campaign promise to take significant action to address climate change.
The news did little to appease oil and gas groups clamoring for more favorable drilling conditions or environmental groups frustrated with the pace and scale of the White House’s efforts to transition the United States to renewable energy sources.
Western Energy Alliance President Kathleen Sgamma, who has previously criticized the Biden administration for stalling in its compliance with the order a Western District of Louisiana judge issued last June, said in an emailed statement that her group has concerns about the reduction in acreage available for leasing and the Interior Department’s pace for getting new lease sales in the pipeline.
“While we’re glad to see BLM is finally going to announce a sale, the extreme reduction of acreage by 80%, after a year and a quarter without a single sale, is unwarranted and does nothing to show that the administration takes high energy prices seriously,” Sgamma said.
The Western Energy Alliance also expressed frustration with the increased royalty rate.
“Raising the royalty rate 50% increases the costs of production on federal lands, which already carry a higher cost than non federal lands,” Sgamma said. “This increased tax will have the effect of any other tax increase — you get less of what’s taxed, in this case, federal oil and natural gas.”
Montana Attorney General Austin Knudsen said he’s dubious that the White House really wants the lease sales to result in oil and gas coming out of the ground.
“From everything I can see, while they’re technically resuming oil and gas leasing, the federal government is doing everything it can to disincentive oil and gas leasing on federal land,” Knudsen told Montana Free Press, citing royalty rates, new regulations around flaring and venting, and new processes for garnering easements on leased land as examples.
The previous royalty rate was 12.5% and hadn’t been raised by the federal government since it was first imposed in the 1920s, according to the Associated Press. Over the past decade, lease sales and royalties companies pay on extracted oil and gas have generated $83 billion in revenue, with half of that amount funneled into the state where the drilling occurs.
The new lease sales are happening at a tense moment for energy markets, with politicians like Knudsen pressuring Biden to do more to curb fuel prices and climate advocates calling for recent upheavals in international oil and gas markets spurred by Russia’s invasion of Ukraine to hasten the country’s transition to renewable energy sources.
“We have heard a lot of rhetoric from President Biden and his administration about the need to take action on climate,” said Kyle Tisdel, climate and energy program director with the Western Environmental Law Center, in an emailed release. “But not only is the administration not doing everything it could — it is not really doing anything. Climate action was a pillar of President Biden’s campaign, and his promises on this existential issue were a major reason the public elected him. Achieving results on climate is not a matter of domestic politics. It’s life and death.”
Western Watersheds Project Executive Director Erik Molvar centered the White House’s March announcement that it would increase American natural gas exports to the European Union in his remarks about U.S. energy policy.
“Ramping up exports of liquified natural gas to Europe in response to the invasion of Ukraine is a losing proposition that will take too long to implement to address current energy demands,” Molvar said. “Instead of taking decades to build the necessary export terminals so we can keep burning fossil fuels and turning the Earth into a fiery hellscape, we should be investing in solar production in urban settings where the energy is being used, on rooftops and parking lot awnings, so Europe and the United States can both transition to clean power sources and get that production online a whole lot faster.”
BLM also initiated a 30-day protest period when it announced the lease sale. During that period, the public has a final opportunity to raise concerns about the pending auction.
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