The Facts


Western Values Project aims to provide members of the media, policy makers and the public with an honest, accurate and rhetoric-free source of information about energy development on public lands.

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New analysis from Western Values Project shows that oil and gas production on public lands is strong and steady. That’s despite the common arguments on both sides of this debate which hold that production on federal public land has practically ground to a halt, is surging forward completely unfettered, and that regulations either go way too far or not far enough in addressing this issue.  The facts included below belie a different reality than all of these claims suggest, so we hope this analysis will help you sort through the confusion in these debates.

Federal Onshore Oil and Gas Production

Oil and Gas Production Federal Onshore Minerals

Source: Office of Natural Resources Revenue-Statistical Information 

Federal onshore oil production has doubled since FY 2004. Last year, production increased 25% over FY 2014 levels and reached its highest point in more than a decade.

Despite a 30% decrease in gas prices, gas production also increased on federal lands last year. Since 2013, the U.S. has produced more oil and gas than any country in the world, including Russia and Saudi Arabia.

Acres Receiving Bids

Percentage of Offered Acres Receiving Bids
Source: BLM Oil and Gas Statistics

Each year, the oil and gas industry nominates millions of acres of federal lands for leasing, most of which the Bureau of Land Management (BLM) offers in lease sale auctions. Even though leases offered at auction are the product of industry nominations, companies typically bid on less than one-third of lands offered by BLM.

Last year, BLM offered 2.3 million acres for lease, but less than 25% of those acres, around 520,000, actually received bids. Companies are therefore nominating far more federal lands for leasing than they actually plan to lease and develop, and BLM appears to be providing ample opportunities for industry to purchase leases.

Average Bonus Bids

Average Bonus Bids
Source: BLM Oil & Gas Lease Sale Results

BLM collects bids—called “bonus bids”—when companies purchase federal oil and gas leases at auction. Since bonus bids result from competitive bidding, they are good indicators of the value industry places on federal oil and gas leases.

BLM data shows that bonus bids have been rising—from 2006 to 2015, the average bid more than quadrupled, from $53 to $230/acre. This suggests that BLM is increasingly offering higher-value lands—lands with the greatest potential for producing oil and gas and generating revenue for taxpayers—in its lease sales.

Producing, Non-Producing Leases

Producing, Non-Producing Leases
Source: BLM Oil and Gas Statistics

The vast majority of federal leases are never drilled or developed. At the end of FY 2015, 32.2 million acres of federal land were under lease, yet only 12.8 million acres—less than 40%— actually produced oil or gas.

The presence of millions of acres of non-producing leases on federal lands is not new—data over the past decade points to a regular surplus of federal leases and suggests that, at least on federal lands, more leasing does not equate to more drilling. In fact, the Congressional Budget Office found that wells were drilled on only 1 in 10 of all federal leases issued between 1996 and 2003.

Unused Drilling Permits

Unused Drilling Permits
Source: BLM Oil and Gas Statistics

Along with unused leases, industry also has a record number of unused drilling permits for federal lands – more than 6,000 at the end of FY 2015. This number will likely rise in the coming years, as industry is deferring or cancelling many permitted drilling projects due to declining oil and gas prices. In fact, in FY 2015, BLM issued almost 2,000 more drilling permits than industry drilled (or “spud”) new wells – one of the largest disparities in recorded history.

Drilling Activity and Oil Prices

Drilling Activity & Oil Prices
Sources: Baker Hughes Rig Count, WTI Crude Oil Spot Price, Noble Energy Third Quarter Report for 2015 at p. 29 (“In the current commodity price environment, we are assessing our future plans and may consider divestment opportunities.”).

As shown in the graph above, which compares the number of domestic drilling rigs with the average price of crude oil over the past decade, there is a direct relationship between market prices and drilling activity. Last year, as oil prices fell 50% from 2014, from $93.17 to $48.66/BBL, the number of drilling rigs also fell 50%, from 1,862 to 978.

Individual companies also plan to decrease drilling and reduce other capital expenditures as a result of low oil prices last year. For example, in a recent financial filings, WPX Energy reported that its “2015 drilling activity has been greatly reduced in comparison to 2014 as we continue to either drill locations that generate the highest economic returns, preserve leases or optimize the drilling rigs already under contract in an effort to reduce the impact of rig release penalties.”

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