Despite the Trump Administration's efforts to encourage more energy production on federal leases, there has only been modest oil and gas growth over the past few years. In 2019, gas production on federal and Native American land, including offshore leases, averaged 12.97 Bcf/d, according to data from the US Department of the Interior. This represents an increase of 231 MMcf/d since 2017, and a decline of nearly 400 MMcf/d from 2016. Nearly all the production growth over the past three years has been on Native American leases, as production on federal land has remained flat since 2017.The production growth was due to permits being issued to companies more quickly without compromising the landscape and public waters, said Casey Hammond, assistant secretary of the DOI, in a statement.
US federal gas production peaked in 2004 at 21.3 Bcf/d when Henry Hub averaged nearly $6/MMBtu for the year and before the advanced development of hydraulic fracturing opened new reserves sprawled across state and private land.
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However, the most impactful move the Biden Administration is likely to make regarding oil and gas production is curtailing drilling leases on federal land. The majority of shale activity takes place on land owned by US states or privately owned property. Only about 22% of US oil production and 13% of natural gas production is produced from federal licenses.
Biden proposed halt of new drilling permits on federal lands and waters puts 1.1 million b/d of oil output and 3.7 Bcf/d of gas output at risk by 2025 if existing permits and drilled-but-uncompleted wells are allowed to continue, according to S&P Global Platts Analytics. There are about currently 3,200 stockpiled permitted wells on federal lands as well that operators can lean on in the event of a policy change. More than 2,000 of those are in New Mexico over the Permian Basin.
A total federal drilling ban would cut oil output by 1.6 million b/d. Tighter emissions controls would also crowd out marginal producers. About 750,000 b/d and 9 Bcf/d of production in the US comes from low-producing stripper wells, potentially more vulnerable to costs of increased regulations, according to Platts Analytics.
Regulations relaxed under TrumpBiden's pick to lead the US DOI, which manages oil and gas leases on federal land, has opposed oil and gas drilling on federal and Native American land. Deb Haaland, a Democratic US Representative from New Mexico, will also be the first Native American ever appointed to serve in a presidential Cabinet if the US Senate confirms her nomination.
"As our country faces the impacts of climate change and environmental injustice, the Interior Department has a role to address these challenges," Haaland said in a statement. "The president-elect's goals, driven by justice and empowering communities who have shouldered the burdens of environmental negligence, ensure that the decisions at Interior will once again be driven by science."
During Trumps four years in office, he has undone or halted several regulatory actions, which Biden looks likely to reverse. This includes the DOI revoking the 2015 Bureau of Land Management's rule regulating fracking on federal and Indian lands.
"Adding a layer of duplicative federal regulations does not improve on the success of existing state and federal regulations," said Erik Milito with the American Petroleum Institute. "If the rule were allowed to continue, development in several states, such as New Mexico, Colorado and Wyoming, could have been especially hard hit with slowed permitting and limited access to public lands, stunting economic growth and pushing away jobs."
The BLM also suspended the 2016 rule called "Waste Prevention, Production Subject to Royalties, and Resource Conservation" until January 2019. The rule was drafted to reduce gas flaring on onshore federal and Indian leases which in turn could boost federal royalties.
Trump also reduced two national monuments in Utah by a combined 2 million acres. Although one of the monuments was located over the Paradox Basin, the industry is not expected to drill oil and gas wells in the former monument as rates of return in the play are among the lowest in the US. The administration also offered drilling leases in the Alaska National Wildlife Refuge in late 2020.
