Trump administration pauses some oil and gas leasing amid coronavirus pandemic

Source: By Dino Grandoni with Paulina Firozi, Washington Post • Posted: Wednesday, May 27, 2020

The Trump administration appears to be pumping the brakes on auctioning off the rights to drill for oil and gas on some public lands out West as the coronavirus pandemic continues to slam the energy economy.

The Bureau of Land Management abruptly postponed a scheduled auction of 45,000 acres in New Mexico scheduled for Wednesday and Thursday of last week.

And the agency, which oversees oil and gas leasing on public lands, also has yet to announce periods during which the public can comment on three other proposed sales — a legally necessary step for proceeding with the auctions —  in Utah and Nevada over the next four months.

Methane is flared near Carlsbad, N.M. (Steven St John/Bloomberg)
The BLM provided little explanation for its actions, but they come as the price of oil has plummeted.

The agency said it has been following health guidelines from federal and state officials in all its auctioning decisions, but did not explain why it stopped the auction in New Mexico.

“All of our actions, including comment periods and lease sales, are being evaluated on a case-by-case basis, and adjustments are being made to ensure we are allowing for proper public input, while protecting the health and safety of the public and our employees,” said BLM spokeswoman Megan Crandall.

The state of Utah, meanwhile, made what it called a “conscious decision” to halt its own oil and gas auctions on state-owned lands until July because of “current market factors” tied to the pandemic, according to the state’s website.

The price of West Texas Intermediate oil, a U.S. benchmark, has rebounded a bit since its lowest point during the pandemic. But the price oil is fetching on the open market has still been slashed nearly in half since the start of the year as fewer Americans drive, fly or work in factories to help halt the virus’s reach.

Also weighing on the Trump administration is a series of court rulings vacating past lease sales. Earlier this month, U.S. District Judge Brian Morris ruled the BLM improperly issued 287 oil and gas leases on nearly 150,000 acres in Montana after not adequately accounting for drilling’s impact on both local water supplies and on global climate change.

And just on Friday, Morris canceled energy leases on more than 470 square miles of public land in Montana and Wyoming, saying the Interior Department did not do a good enough job protecting the habitat for greater sage grouse, a declining bird species.

The lack of information from the BLM has even Trump’s industry allies scratching their heads.

“We don’t know what happened with the New Mexico and Utah lease sales,” said Kathleen Sgamma, head of the Western Energy Alliance, which represents oil and gas companies. “We have calls into BLM, but haven’t gotten a response.”

Aaron Weiss, deputy director of the Center for Western Priorities, was checking the BLM’s website on the evening of May 19 and was surprised to see the lease sale scheduled for the next day was suddenly canceled.

It’s “really bizarre,” said Weiss, whose group opposes the Trump administration’s aggressive oil and gas leasing plans. “We’ve been watching that since we were keeping tabs on the lease sale.”

Another government web page initially said that a comment period for a lease sale of potentially more than 150,000 acres in southern Utah would end on Aug. 24. Now it just says the comment period is “TBD.”

“It’s been really hard from our end to figure out what is going on,” said Landon Newell, a staff attorney with the Southern Utah Wilderness Alliance, which opposes the auction that could bring oil drilling closer to Arches and Canyonlands national parks.

The delays come as the Trump administration offers existing wells near proposed lease sites an economic lifeline.

In Utah alone, 76 wells operated by six companies have been given relief on royalty payments since late April. Other state-level BLM offices have yet to release information on who is getting royalty relief outside Utah.

Many of those leases are located in the same red rock landscape in Utah with parcels set for auction in September.

New drilling activity could bring diminished air quality and bright flames from the burning off of excess gas to a region known for its clear night skies and stunning canyon vistas. The area’s two national parks draw in millions of visitors annually.

“This handout to the oil and gas industry highlights the absurdity of the Trump administration BLM’s ‘energy dominance’ agenda,” Newell said. “The world is awash in unneeded oil and gas but nonetheless the BLM insists on opening up more public lands.”

But the BLM said it’s difficult to predict the price of oil once wells on the auction block later this year start producing.

“While oil and gas production on federal lands is a market-driven activity, we cannot know what the oil and gas market will look like when the sale is held or when production begins,” Crandall said. “These sales help propel America’s economy and support good-paying energy sector jobs.”