Giving It Away

ReportGiving It AwayHow Utah Loses from Oil and Gas Development on Federal Lands

Energy & Natural Resources,  | Analysis
Sep 12, 2019  | 2 min read | Print Article

The complete report is best viewed here, in PDF format

Significant oil and natural gas reserves exist on federal lands throughout Utah and other Western states. The Bureau of Land Management—a federal agency within the Department of the Interior—regulates these reserves and is mandated by law to collect fair market value from the development and sale of these oil and gas resources. However, the Bureau of Land Management has failed in its mandate to ensure taxpayers receive a fair market value due to weak, decades-old management policies.

Pervasive problems within the federal oil and gas leasing system have led to billions of dollars in lost revenue nationally. This additional revenue could be used to address pollution costs and long-term liabilities caused by oil and gas development and consumption. This report will focus on the Bureau of Land Management (BLM) policies, many of which have remained unchanged for decades, that have resulted in lost revenues for both the federal treasury and the state of Utah, such as:

    • the annual rental rates BLM charges, and the minimum bid for oil and gas leases that have not changed in more than 30 years;
    • an antiquated procedural carve-out that allows companies to lease federal land without paying any bid in some cases;
    • the royalty rate BLM collects on the sales value of oil and gas extracted from federal lands that lags behind rates imposed on
      production from federal waters and many state lands; and
    • the weakened natural gas waste rule that fails to charge royalties for methane leaked during drilling on federal lands.

Federal oil and gas development in Utah illustrates how BLM’s bad policies can cost federal and state taxpayers billions of dollars in lost revenue
over time. Production on federal lands in Utah generates significant receipts. Yet, because of BLM’s low onshore royalty rate, taxpayers have lost more than $1.4 billion from 2008 to 2017. And since states receive roughly half of federal receipts from resource development within their borders, Utah taxpayers lost out on more than $700 million in revenue.

Download or read the full report below.