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Federal oil and gas leasing needs overhaul, analyst says
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Federal oil and gas leasing needs overhaul, analyst says

Oil and gas leases on federal land are past due for revision according to former Montana revenue director Dan Bucks in a report released Wednesday.

The report comes four months into President Joe Biden’s pause on oil and gas leases. Bucks said Wednesday that decades have gone by without a meaningful revision to the leasing program managed by The Department of Interior.

“Montana and Montanans have been especially harmed by wasteful, non-productive federal leasing,” Bucks said during a press call. “Interior has burdened Montana with over a million acres of suspended oil and gas leases, more than any other lower-48 state. Suspended leases produce no oil and gas and not a single penny of rental or any kind of revenue for the public.”

Bucks produced a similar report with Taxpayers for Common Sense in 2015, as the Obama administration suspended oil, gas and coal leases to study whether the public was getting a fair price from extraction. Wednesday’s findings were similar in that he found that the federal royalty rate of 12.5% for onshore oil and gas was significantly lower than the median royalty rate of 19.37% collected by states. He suggested the federal government set onshore royalties at 18.75%, which is the offshore rate. He suggested adjusting for inflation minimum rental rates and lease bids established in the 1980s.

The new report was commissioned by the Wilderness Society. The publication noted that more than 3 million acres of federal land were locked in leases that were not resulting and oil and gas production. Several states have shortened oil and gas leases to promote development. Montana is an outlier with primary lease of 10 years.

The Montana Wildlife Federation and Business for Montana Outdoors argue the state would be better served if the federal Bureau of Land Management managed federal lands for multiple use. Both groups support the current pause on leasing.

Congress is divided on the leasing pause. Sen. Steve Daines, a Montana Republican, has introduced a bill to end the pause, which he has called an attack on American energy. Daines is also one of several Republicans attempting to revive development of Keystone XL Pipeline, which sputtered under Donald Trump and was then abandoned by President Biden.

Sen. Jon Tester has proposed ending non-competitive oil and gas leases. There are 1.4 million acres under federal lease in Montana with no production of oil or gas. The Montana Democrat supports the Biden pause on leasing, but has said the pause cannot be permitted to result in job loss.

The Biden administration has promised to issue a report on oil and gas leasing this summer, which Tester is waiting to read.

Although new leases aren’t being issued, oil and gas exploration remains possible on more than 13 million acres of federal land, for which 7,000 drilling permits have been granted.

Montana is one of 24 states that in March sued the Biden administration over the leasing pause.

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