BLM Response to Western Energy Alliance

Oil and gas leasing is a market-driven activity, and leasing demand is a function of market conditions and national energy consumption.  In response to falling oil and natural gas prices, oil and natural gas development companies have scaled back energy development and leasing activities—a downward trend that is reflected in decreased leasing nationally, not just on federally-managed lands.  In a February 25, 2010 interview with Energy and Environment Daily, Kathleen Sgamma, Western Energy Alliance government affairs director, stated “Drilling is down because of the economy.  I don’t think anyone denies that.”

Regardless of decreased commodity prices and reduced industry activity, the BLM continues to offer industry-nominated parcels for auction, and has even seen an increase in generated revenues for American taxpayers.  In 2010, the BLM held 29 onshore Federal oil and gas lease sales that covered 3.2 million acres in the West and in Alaska and generated more than $213 million in revenue for American taxpayers—a 57% increase over 2009.  In 2011, the BLM will hold 36 onshore oil and gas lease sales. 

A rebound in commodity prices could affect an increase in industry’s desire to pursue oil and natural gas exploration, development, and production, subsequently increasing the number of leases issued. In the meantime, the BLM’s oil and gas leasing reforms will present increased opportunities for public participation and more thorough environmental review, which can reduce the number of lease protests filed and enhance the BLM’s ability to resolve protests before auctions—all of which will increase confidence in BLM’s oil and gas leasing process as industry waits for a positive change in market factors.

Chart Showing New Leases Issued & New Drilling Permits Approved in Relation to Commodity Prices