Big U.S. oil drillers have federal permits to mute effect of any Biden ban

By admin

Reuters interviews with executives showed that US President Joe Biden promised to ban new oil and gas extraction on federal land, and it will take several years to shut down the production of shale rigs because they already have reserves. license.

But small independent oil drillers without the resources of large companies are more worried that Biden has vowed to strengthen regulations and stop issuing new permits on federal land. This is his overall plan to tackle climate change and achieve net zero emissions in the economy by 2050. a part of.

Federal lands are the source of about 10% of U.S. oil and gas supply. Fossil fuels produced on federally managed lands and waters contribute nearly 25% of U.S. greenhouse gas emissions, according to government estimates, making them an easy target for the administration’s climate agenda.

Biden’s pledge would reverse former President Donald Trump’s efforts to maximize drilling and mining on federal property. In an order dated Wednesday, the Biden administration suspended oil and gas leasing and permitting on federal lands for 60 days while it reviews the legal and policy implications of the mineral leasing program. But a freeze or ban will not end production in those areas overnight.

The seven companies that control half the federal supply onshore in the Lower 48 states have leases and permits in hand that could last years.

“We have always been very confident that we will continue to develop and drill on federal acreage,” said David Hager, executive chairman of Devon Energy Corp, the biggest oil producer on onshore federal land in the Lower 48 states. “It’s embedded into the rights we have in the leases and we’re doing it the right way.”

He said he expects the company’s federal land permit to last for at least four years.

Other top producers on federal land include EOG Resources Inc, Exxon Mobil, Occidental Petroleum, ConocoPhillips and Mewbourne Petroleum.

Representatives of these companies did not comment on this article. However, several companies have issued public statements stating that they have a large number of federal permits and are capable of meeting the stricter emission regulations expected by Biden. They also stated that they can quickly transfer drilling to state or private land once federal permits are exhausted.

EOG says it has a federal license for at least four years. “When it comes to the right to obtain federal land, this is one of the things we don’t really worry about in our business. Chief Operating Officer Billy Helms said at last year’s investor conference: Beyond the land, we have a lot of potential. “

Occidental Petroleum stated that it had more than 200 federal drilling permits on hand last year, and has requested to apply for about 200 more drilling permits on New Mexico land. Some of the richest reserves are under federal government-owned properties. .

Ameredev II produced approximately 10,000 barrels of oil a day in the Permian Period in New Mexico and was granted a federal drilling permit for at least four years.

CEO Parker Reese said: “We try to maximize our value within the range of uncertain possibilities.”

Energy consulting firm Rystad said that on the eve of the November presidential election, the reserve of federal land drilling permits increased, and the number of federal permit applications rose from 18% in 2019 to all permit applications for major US oil fields 31% of the amount.

Biden’s team did not respond to several requests for comment.

Most onshore federal drilling happens in Western states like New Mexico, Colorado and Wyoming, which get a share of extraction royalties and depend on that revenue.

As Biden takes office, U.S. shale drilling industry has already declined sharply due to weak prices.

Total U.S. shale output is expected to fall to 7.5 million barrels per day in February, the U.S. Energy Department said on Tuesday, which would be the lowest since June 2020.

Shale drilling accounts for roughly two-thirds of U.S. crude oil production, but output is expected to decline throughout 2021 as producers rein in spending.

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