Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley
Facing mounting political pressure to take action to increase U.S. energy security and lower costs for American consumers, the Biden Administration on April 15 announced it would restart the federal leasing program for onshore federal lands. This action is required by law, and the Administration had little choice but to restart the program due to a number of legal decisions requiring them to do so. The program has been on pause since the Department of Interior issued a moratorium at the beginning of the Biden Administration.
The statement released by the Department of Interior indicated the sale will include 173 parcels on about 144,000 acres, or about 20% of the area that had been nominated for energy-related lease sales and the overall acreage Interior analyzed for inclusion in potential sales. This decrease is unfortunate, as it is the belief of the Energy Workforce & Technology Council that in order to truly move the U.S. towards full energy security, a larger total amount of land should have been included in the sale. While the parcels that will be made available have not yet been released by Interior, we expect this announcement soon.
The sales will also stipulate that companies will have to pay an 18.75% royalty rate for the oil and gas they produce on federal land and use the “best-available science including analysis of [greenhouse gas] emissions,” the Interior Department said. New leases will also focus on acres already adjacent to land with existing oil and gas production infrastructure. This royalty increase represents a 50% increase over the current 12.5% rate on federal land, which is significant. Given the often long wait for permitting on federal lands, it is not clear if this new lease sale will be attractive enough to operators at the new rate to significantly move the needles in regards to increasing domestic production.
The Council has been advocating with both the Administration and Congress to restart the leasing program, so the news of some progress in that direction is a welcome sign. However, additional changes and an increase in total land to be made available would be welcome. We will continue to keep members update on developments in this area, as well as continue to advocate for full access to federal lands for energy production.
If you would like to get involved with the Council’s advocacy efforts or the Government Affairs Committee, contact SVP Government Affairs Tim Tarpley.
Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
