New Fiscally Responsible Oil & Gas Reforms Protect Taxpayers

New Fiscally Responsible Oil & Gas Reforms Protect Taxpayers

For the first time in over 60 years, the Bureau of Land Management (BLM) – the federal agency that oversees oil and gas activity on federal lands – has increased its bond minimums. Bonds are an insurance policy for American taxpayers – the true owners of federal lands – and are supposed to ensure that companies who drill on federal lands have set aside enough funds to cover plugging and clean-up costs once production is finished. But for decades BLM’s oil and gas bond minimums were never increased, not even to account for inflation and even as companies drilled tens of thousands of wells on federal land across the country. Companies could provide as little as $10,000 in bond coverage per lease no matter how many wells they drilled. This flawed-system led to a $13.7 billion deficit between the estimated reclamation costs for the 90,000+ wells on federal lands and the total amount of bonds held by BLM. Slowly but surely, BLM’s new bond minimums will bring that deficit down. Companies now have three years – a very generous timeframe, mind you – to increase their lease bonds to the new minimum of $150,000. This level accounts for inflation, as well as reclamation costs for a typical lease on public lands. And it builds on bonding reform at the state-level, as many states, including Wyoming, recently strengthened their bonding requirements in response to what some have described as an orphaned well “crisis.” Not surprisingly, the oil and gas industry would much prefer that you – the American taxpayer – continue to foot the bill for its clean-up costs. The...
CRS Releases “Restoring Accountability” Follow-up Report

CRS Releases “Restoring Accountability” Follow-up Report

PRESS RELEASE                     October 24, 2023 CRS Releases “Restoring Accountability” Follow-up Report on Taxpayer Exposure from Orphaned Oil and Gas Wells Conservatives for Responsible Stewardship (CRS), a national grassroots organization with more than 23,000 members, has produced a new report following up on its 2021 report Broken Promises, which detailed the staggering taxpayer exposure from orphaned and abandoned oil and gas wells. “Despite agreeing, as a condition of their drilling permit, to fully clean up and plug well sites once they are finished using them, oil and gas companies regularly skip out on that obligation, leaving us taxpayers on the hook for billions of dollars in clean-up costs,” explained CRS president David Jenkins. This new report, with updated data, underscores how this fiscal burden on taxpayers continues to grow and explains how long overdue new rules proposed by the Department of Interior (RIN 1004–AE80) to significantly increase its oil and gas program bonding requirements can help. In Broken Promises, we reported that at the end of FY2020, there were more than 96,000 “producible and service wells” on federal public lands, which could leave U.S. taxpayers on the hook for as much as $13.7 billion in future clean-up costs. Since then, BLM has approved more than 11,200 additional permits for oil and gas companies to drill new wells on federal public lands—wells that, without federal bonding reform in place, potentially exposing U.S. taxpayers to an additional $1.6 billion more in clean-up costs. Taxpayers could eventually have to pony up as much as $15 billion, and that does not account for any potential...
Nixon’s Endangered Species Act turns 50

Nixon’s Endangered Species Act turns 50

The Endangered Species Act (ESA) turns 50 years old this year. The law, which was passed in 1973 by overwhelming bipartisan majorities in Congress (unanimous in the Senate) and signed into law by President Nixon, stands as an enduring testament that we can rise above our lesser instincts and be good stewards of what President Reagan referred to as “this magical planet that God gave us.” From the deliberate and cruel efforts to eradicate wolves and grizzly bears from the Lower 48, to the carelessness that drove the bald eagle, our national symbol, to the brink of extinction, history is full of examples where mankind has been intolerant of wildlife and/or ignorant of its needs. Thanks to the ESA, bald eagle numbers have recovered across the Lower 48, going from a low of 1,000 or less in the 1950s to more than 300,000 today. Wolves and grizzly bears have also rebounded significantly, with healthy, sustainable populations in several states. Unfortunately, too many people fail to recognize the ESA as the conservative law it is. President Reagan once rhetorically asked, “What is a conservative after all, but one who conserves?” Conservative political theorist Russell Kirk went even further, writing in a Baltimore Sun op-ed, “nothing is more conservative than conservation.”Wildlife, from apex predators to the tiniest insects, play an essential role in keeping the earth’s life-sustaining ecology healthy. Bears and wolves, by preying primarily on weak and sick moose, deer, or elk, make the populations of those ungulates healthier. And pollinators, such as bees and butterflies, are essential to our food crops. From my personal experiences, I have come to...
Rising Electric Bills

Rising Electric Bills

With economy-wide inflation still plaguing us and stretching paychecks thin, we should be paying extra close attention to energy prices. The cost of energy affects the price of almost everything. In the transportation sector, high fuel prices increase the costs of getting products to market or directly to your home. High electric and natural gas bills contribute to inflation not only by raising the cost of doing business, but also by directly increasing the cost of powering your home. In both cases, the higher prices can be attributed largely to the fact that fossil fuels are global commodities with their price set by international markets.  That means that events virtually anywhere in the world can increase our energy costs here in the United States. The recent spike in these energy costs are tied directly to Russia’s invasion of Ukraine. Sanctions on Russian energy in response to the invasion—and retaliatory measures by Russia—have tightened oil supplies and greatly increased Europe’s demand for U.S. natural gas. Russia is a major energy producer, and over the years, Europe became heavily dependent on Russia for its oil and natural gas supplies. Europe has finally woken up to the strategic vulnerability posed by being over reliant on Russian energy, and is now turning to the U.S., the world’s leading producer of natural gas (Russia is second) to help wean itself off  of Russian natural gas. That has dramatically changed the natural gas market here. For a long time we had to use all of the gas we produce domestically because there was no way to ship it overseas, which kept our natural gas prices...
CRS Releases “Restoring Accountability” Follow-up Report

Broken Promises

Prior to drilling on public land, oil and gas companies must agree to completely clean up, plug, and fully restore drilling sites once they finish with them. Essentially, they must promise to clean up their mess as a condition of the drilling privilege. Unfortunately for us taxpayers, it is a promise that these companies break with increasing frequency. A common practice is for a company to declare bankruptcy and go out of business under the name it is operating under, then start back up as a new entity under a different name, thus shedding all of the financial obligations associated with its former identity. Anytime this happens—or these companies find some other way to skirt their clean-up responsibility—in results in “abandoned” or “orphaned” wells and the clean-up burden shifts to the American taxpayer. The oil and gas companies get all the profit, and leave you and me stuck with the bill. How big is that bill? A new report by CRS projects that we could be on the hook for as much as $13.7 billion for the 96,000 “producible and service” oil and gas wells currently on our federal public lands. And that does not even include the more than 3.2 million wells that the Environmental Protection Agency (EPA) estimates have already been abandoned across our nation. This shirking of responsibility by the oil and gas industry is a chronic problem. The solution, however, is quite simple. Require companies to post reclamation bonds in amounts that are adequate to cover the actual clean-up cost if they break their promise—as is supposedly required by law. That law, 30 U.S.C. §...
It’s Time to Overhaul the U.S. Oil & Gas Leasing Program

It’s Time to Overhaul the U.S. Oil & Gas Leasing Program

Our federal government has historically allowed oil and gas companies to lease America’s public lands across the West for exploration and drilling. One reason for doing this has been to spur economic activity; the other is to generate revenue to the U.S. Treasury on behalf of the landowners…you, me, and the rest of the taxpaying public. In recent years this oil and gas leasing program, which is run by the Bureau of Land Management (BLM), has fallen short on both counts. The process is supposed to work like this: Leases are offered at auction for lands that have been nominated by interested parties. The idea being that these interested parties, ostensibly oil and gas companies, will bid against each other for these leases and drive up the price. That only works if the parcels being offered up for lease have a strong potential to produce lots of oil. However, too often that is not the case. One problem is that BLM allows our public lands to be nominated for leasing anonymously, and pretty much accepts any nomination without scrutiny. This has allowed oil companies and other speculators to nominate huge swaths of land for leasing, often in an attempt to hide which parcels they are actually interested in from potential competition. That brings us to another big problem, price. When the competitive bidding process is thwarted, BLM offers leases on the nominated land for a paltry minimum bid of $2 per acre—which is essentially a big government handout. In addition to shortchanging the American taxpayer to the tune of $12.4 billion between 2012, these practices are also shortchanging the...

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