Trump promised ‘energy dominance.’ Here is what that meant for Utah.
Oil and gas leases went up, but energy production did not.
Trent Nelson | The Salt Lake Tribune
A BLM sign competes with oil wells for attention along the Nine Mile Canyon National Backcountry Byway in Duchesne County, Tuesday January 19, 2016.
President Donald Trump’s signature public lands initiative eased, even erased some bureaucratic obstacles to developing fossil energy.
And nationally, onshore oil and gas production hit historic levels, particularly in states with rich, accessible deposits on public lands, such as New Mexico and Wyoming.
Trump’s agenda of “American energy dominance” likely won’t last, though, as the more conservation-minded President-elect Joe Biden takes office in January. This transition marks a good time to examine what the Trump team has accomplished in terms of energy development and production on public lands.
For Utah, the answer is not much.
According to federal data sources, oil and gas production is down when compared to the years of the Obama administration and revenues have plummeted, shrinking an important source of money for rural Utah.
The Trump administration did substantially increase the amount of public land offered for lease in Utah, but less than half of those parcels have been successfully leased, largely because the BLM can’t find legitimate buyers for these drilling rights. And critics argue that much of what was put under lease is not likely to get developed because the land is in areas with minimal oil and gas potential or the lessees, who acquired the leases at fire sale prices, have no capacity to drill them.
While Utah officials and industry representatives welcomed Trump’s pro-drilling policies, environmentalists and government watchdogs argued they amounted to giveaways to industry and speculators that have led to one lawsuit after another.
“‘Energy dominance’ has been a complete disaster from start to finish. The Trump administration is basically trying to force drilling down the throats of communities across the West,” said Jesse Prentice-Dunn, policy director for the Center for Western Priorities
. “They created immense regulatory uncertainty for companies in the industry with a lot of their ham-handed rollbacks, and that’s leading to court defeats and then more uncertainty for these drillers.”
The nation’s publicly owned mineral resources are administered by the Bureau of Land Management, which oversees about half of the land in Utah.
The agency currently has about 24 million onshore acres under lease for oil and gas extraction nationwide, although half that acreage is not in production. That’s a historically small footprint of public lands under lease, down from about 180 million acres in the 1980s, according to Kathleen Sgamma, president of the Western Energy Alliance. And yet federal leases are producing record volumes of crude oil, just not in Utah.
Sgamma attributed this bonanza in part to Trump’s efforts to eliminate unnecessary regulations. Also helping are the industry’s increasing efficiency and technological advances, as well as the emergence of the Permian Basin, on the Texas-New Mexico state line, as a world-class oil field.
In Utah where production has dropped, environmental groups see a problem with inactive leases, which they say limit the BLM’s management options for these lands, some of which feature important cultural, historic, scenic, recreational or natural attributes.
“It’s allowing people to lock up public lands for a minimum of 10 years in some of the most remote and wild parts of our state,” said Landon Newell, a staff attorney with the Southern Utah Wilderness Alliance (SUWA).
Sgamma rejected SUWA and other groups’ claim that undeveloped leases “lock up” landscapes, pointing out that these lands remain available for various uses.
But critics wonder why the BLM has offered so many Utah leases that companies don’t seem to want. The most recent auction is telling. Of the 24,000 acres offered, only about 4,200 acres sold, and nearly all went for the minimum bid of $2 an acre.
(Christopher Cherrington | The Salt Lake Tribune)
And who submitted those bids? A Utah landman named Vern Jones who holds a contract gig in the BLM’s office that handles mineral leases. In other words, the BLM went through the costly process of vetting the land the industry nominated for leasing, as mandated by Trump’s pro-development policies, then no one showed up to bid except a BLM insider.
Critics point to auction results like this to advocate for an overhaul of the federal leasing program, or to end leasing altogether.
But industry representatives point out that much of the acreage the Trump administration offered was from a backlog of industry nominations dating back to the Obama administration. By the time those proposed leases were put on the auction block, industry’s interest moved on, according to Sgamma.
And just because leases sell cheaply doesn’t mean that someone down the road won’t figure out how to profitably extract oil and gas from them. Sgamma pointed to George Mitchell, the wildcatter who pioneered directional drilling and hydraulic fracturing
in the 1990s. His innovations revolutionized the industry and turned formerly inaccessible hydrocarbon reservoirs into moneymakers.
While oil and gas production has spiked in New Mexico and elsewhere, production took a dive in Utah, even before the pandemic crushed demand for transportation fuels.
The state’s public lands yielded 7.9 million barrels of oil and 143.6 billion cubic feet of natural gas in 2019, according to the federal Office of Natural Resource Revenue. Those numbers represent decreases of 35% and 47%, respectively, from 2015 levels. Revenues from oil and gas activities, in the form of royalties, lease bids and rents, likewise dropped to $140 million from $180 million during that time frame.
Utah’s pre-pandemic production drop came in response to economic forces beyond the industry or the Trump administration’s control. The remoteness of Utah’s oil and gas deposits and poor access to national markets made them less attractive for development than productive fields elsewhere, Sgamma said.
Utah Lt. Gov. Spencer Cox, who will be sworn in as governor next month, is grateful for the Trump administration’s efforts to streamline permitting and make development less costly and burdensome, according to his senior advisor on federal affairs, Gordon Larsen.
“Ultimately market forces, including the availability and ease of developing energy on private lands and in other parts of the country, are a bigger driver of development,” Larsen said, “but the headwinds that energy producers in Utah face would have been much worse without helpful collaboration from federal partners.”
Trump’s lasting legacy on Utah’s public lands will likely arise from the nearly 1 million acres offered for lease on his watch. His administration’s regulatory and permitting rollbacks can be reversed, but leases are not so easily clawed back. They amount to a binding contract obligating the BLM to accommodate oil and gas extraction for at least 10 years.
The BLM has offered 731 parcels for lease covering nearly 1 million acres since 2017, according to an analysis by The Wilderness Society
. But only two-thirds attracted the minimum bid of $2 an acre, and about 240,174 acres — nearly a quarter of the total — went for that lowball price.
The 224 offered leases that didn’t sell will be available over the counter for two years in the BLM’s Salt Lake City headquarters, where they can be purchased for a mere $1.50 an acre.
Companies or individuals with no experience in energy development have purchased thousands of acres of leases, sometimes in places that have no known energy potential, including the 4,200 acres that Jones, the BLM insider, acquired in Iron County at Utah’s last auction.
And in September a philanthropist from Myanmar bought most of the leases the BLM offered across the West, securing a lock on 108 federal parcels, including 16 in Utah. In a Dec. 10 letter to Interior Secretary David Bernhardt, a group of 16 U.S. House members accused the BLM of failing to vet those acquiring oil and gas leases, citing the strange case of Levi Sap Nei Thang
“The Department of Interior must not move forward with future oil and gas lease sales unless it can guarantee that the entities and individuals successfully acquiring federal oil, gas, and geothermal leases are not speculators and are lawfully eligible to do so under the [Mineral Leasing Act],” states the letter, which was signed by Rep. Deb Haaland
, D-N.M., who is Biden’s nominee to lead Interior. “These lands belong to the American people and they are entitled to a fair return on the sales and development of these lands. "
Nearly half of the leases that did sell in Utah were suspended or delayed because of court rulings that found the BLM botched their reviews, according to Newell. Now, the BLM is conducting supplemental environmental analyses on these 242 parcels. Meanwhile, a Dec. 10 ruling from U.S. District Judge David Barlow clouded another 59 leases that were sold at the December 2017 auction.
In response to a suit brought by environmentalists targeting leases near Dinosaur National Monument, Barlow concluded the BLM did not analyze an adequate range of alternatives, although he rejected several other objections the lawsuits raised.
Environmental groups are pushing Haaland and Biden to stop all leasing on public lands
, when the new president takes office.