Losing on Leasing: How Colorado Loses from Oil and Gas Development on Federal Lands

ReportLosing on Leasing: How Colorado Loses from Oil and Gas Development on Federal LandsThe Bureau of Land Management is failing to ensure taxpayers receive fair market value for federal oil and gas resources in Colorado

Energy & Natural Resources,  | Analysis
Nov 26, 2019  | 2 min read | Print Article

Federal taxpayers own significant oil and natural gas reserves on federal lands throughout Colorado and other Western states. The Bureau of Land Management (BLM) within the Department of the Interior (DOI) manages these reserves and is directed by law to collect fair market value from their development and sale. The agency is failing to ensure taxpayers receive a fair market value for these resources because its land management policies are weak and outdated.

Problems within the federal oil and gas leasing system have led to billions of dollars in lost revenue and simultaneously saddled taxpayers with associated pollution costs and long-term liabilities. This report will focus on the costs imposed by the following BLM policies:

  • Royalty rates on the sales value of oil and gas extracted from federal lands that lag the rates imposed on production from federal waters and Colorado state lands;
  • Annual rental rates and the minimum bid price for oil and gas leases that have not changed in more than 30 years;
  • Natural gas waste that’s ignored on federal lands while BLM refuses to charge producers for it, and
  • Antiquated procedural carve-outs that allow companies to lease federal land without paying any bid;

The BLM manages more than 8.3 million surface acres in Colorado. At the end of fiscal year (FY) 2018, the agency reported 3,703 current leases for oil and gas development covering nearly 2.7 million acres of that land. Of those leases, 60 percent were actively producing oil or natural gas at the end of FY2018, leaving 1.2 million acres of federal land leased but lying idle.

Download or read the full report below.