What is going on in Nevada?
Oil and gas industry, Bureau of Land Management are eyeing tens of millions of acres for drilling in a state where there’s virtually none
For years, oil and gas corporations and speculators have worked hand in hand with the Bureau of Land Management to open millions of acres of public lands in Nevada to drilling. The odd part — there is hardly any ongoing drilling in the state and no oil and gas boom in sight. Diving into the question of “What’s going on in Nevada?” reveals a broken system for leasing our public lands that cheats taxpayers and makes it harder to manage those lands for other uses, like conservation and recreation.
The oil and gas industry is asking for tens of millions of acres of leases in Nevada
Under the current system, oil and gas companies nominate public lands and minerals they’d like to see made available for leasing. Those requests can be, and often are, made anonymously, and don’t cost anything. Acquiring a federal lease gives a company the right to develop the underlying oil and gas after securing necessary drilling permits.
From 2009 to 2018, the industry nominated an astonishing 58 million acres for oil and gas leases in Nevada. That’s roughly 55 percent of all public lands nominated nationwide in the same timespan, and far and away the most of any state in the country. Alaska and Wyoming, the next closest, have seen just 40 percent and 13 percent as much demand over the same timeframe, respectively. For context, 58 million acres is roughly 82 percent of Nevada, although it’s likely some lands had been nominated multiple times.
The Trump administration is working overtime to offer oil and gas leases in Nevada, but few are buying
Under the Trump administration, the Bureau of Land Management (BLM) has offered more than 1.8 million acres of oil and gas leases in Nevada at auction — third-most of any state, behind Alaska and Wyoming. However, only 162,723 acres actually sold at auction, and of those, 85 percent went for the paltry minimum bid of $2 per acre. The result — Nevada lease sales have netted just over $606,000, the second-lowest of any state, behind only Arizona, which has very little oil and gas.
Some individuals and companies are snapping up leases that went unsold at auction. Under the current system, anyone can walk into a BLM office for the next two years and purchase an unsold lease by paying only the first year’s rent of $1.50/acre (even the minimum bid is waived), referred to as a “noncompetitive” lease. According to a study by Taxpayers for Common Sense, the BLM issued more than 2 million acres of noncompetitive leases in Nevada from Fiscal Year 2009 to 2018.
Even though few oil and gas companies are actually buying leases, BLM officials have made clear they will continue to grant the industry’s requests. Kemba Anderson, the official in charge of BLM Nevada’s oil and gas program told E&E News, “Whatever requests we get from the public by the cutoff, we’re going to try to do our due diligence to try to make those lands available at the next available sale.”
There’s hardly any drilling happening in Nevada
According to the latest BLM data, there are only 121 producible wells accessing publicly-owned minerals in Nevada, out of 96,199 nationwide. Nevada drillers produced roughly 255,000 barrels of oil in all of 2018, around half of what California drillers produce in a single day.
Since 2000, the BLM has approved just 87 drilling permits in Nevada, out of more than 70,000 nationwide. Those permits haven’t always translated to drilling — from 2009 to 2018, only 17 wells were drilled, never more than three in one year. Not surprisingly, the vast majority of federal oil and gas leases are sitting idle. As of last year, just 36 of 498 current leases were producing.
The BLM is seeking to offer leases in key wildlife habitat and prized recreation areas
In its rush to grant industry requests, the BLM has prioritized drilling over conserving wildlife and recreation hotspots. In 2017, the agency sought to lease public minerals in the Ruby Mountains, a remote range beloved by recreationists and often called the “Swiss Alps of Nevada.” After significant public opposition, the U.S. Forest Service, which manages the land atop those minerals, denied BLM’s request. However, oil and gas companies have already submitted new requests to lease in the Ruby Mountains.
In 2018, the BLM was forced to withdraw 330,000 acres of sage-grouse habitat from a lease auction after a judge ruled the public did not have sufficient opportunity to comment. Nevada provides critical habitat for the imperiled bird, which has seen steep population declines across the West due to increasing development. However, the BLM has moved to put many of those leases back on the auction block and is currently proposing to offer prime sage-grouse habitat in an upcoming oil and gas lease auction this September.
Why is this happening?
There are two plausible explanations for why companies are seeking oil and gas leases in Nevada — speculation and padding their stats for investors. In recent decades, speculators have taken advantage of bargain rates, acquiring leases, then seeking to flip them to larger companies for a profit. The state’s first and third top leaseholders, Larry Moyer and Stephen Smith, were recently interviewed by the New York Times at an oil and gas industry convention where they were attempting to sell their leases to attendees.
The state’s second-largest leaseholder is Noble Energy, Inc., a multinational oil and gas corporation based in Texas. According to Taxpayers for Common Sense, Noble acquired leases to more than 130,000 acres in Nevada from 2009 to 2012, dug exploratory wells, then abandoned the project. The company still holds those leases, however, which account for some 7 percent of its undeveloped acreage held worldwide, but just 0.07 percent of its undeveloped leasehold costs. As a result, Noble is able to brag about their lease acreage to investors, while paying minimal fees to taxpayers.
The system is broken
While Nevada is an outlier, it highlights many of the things that are broken in how the federal government manages our public lands, especially when it comes to oil and gas development. From start to finish, the process incentivizes companies to identify public lands they want to lease, then pay bargain rates to squat on those leases while rarely producing oil and gas. Meanwhile, offering such widespread oil and gas leases around the West leaves the looming threat of development hanging over critical wildlife habitat and key recreation areas. It is beyond time for Congress and the Bureau of Land Management to reform the oil and gas leasing process so that we actually manage our public lands in a balanced way, not just placing drilling above all else.