Federal Rule Raises Cost for Oil and Gas Extraction on Public Lands

An update to federal regulations raises minimum bonding to limit orphaned wells and ensure cleanup costs are covered — but it still may not be enough to mitigate the damages caused by oil and gas drilling.

2 minute read

April 17, 2024, 10:00 AM PDT

By Diana Ionescu @aworkoffiction


Bird's eye view of oil field in New Mexico desert.

Oil fields in New Mexico. | Purplexsu / Adobe Stock

A new rule from the U.S. Department of Interior will make oil and gas drilling on public lands more expensive, reports Nick Bowlin in High Country News.

“The reform includes a jump in the amount of money that drilling companies must put forward to ensure cleanup of their wells. It also raises the royalty tax rate that operators pay on the minerals they extract on public land, which had not changed in more than a century,” Bowlin adds.

The rule is designed to reduce wasteful speculation and make companies responsible for the costs of environmental cleanup, according to Interior Secretary Deb Haaland. The rule raises minimum bonds for oil and gas leases on public lands from $10,000 to $150,000 — but “Despite these increases, the new bonding levels are unlikely to cover the complete cost of cleaning up the more than 90,000 unplugged wells overseen by the Bureau of Land Management.”

Under the new rule, companies will pay a higher royalty tax rate on profits from extraction.

While many environmentalists praise the changes, some say updating rules for oil and gas extraction is not enough to reduce fossil fuel dependence and extraction in the long term. According to Gladys Delgadillo, a climate campaigner at the Center for Biological Diversity, “Updating oil and gas rules for federal lands without setting a timeline for phaseout is climate denial, pure and simple.”

Monday, April 15, 2024 in High Country News

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