[Senate Hearing 117-123]
[From the U.S. Government Publishing Office]
S. Hrg. 117-123
ENERGY DEVELOPMENT ON FEDERAL LANDS,
FOCUSING ON THE CURRENT STATUS OF
THE DEPARTMENT OF THE INTERIOR'S
ONSHORE OIL AND GAS LEASING PROGRAM
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
APRIL 27, 2021
__________
Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
44-471 WASHINGTON : 2023
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JOE MANCHIN III, West Virginia, Chairman
RON WYDEN, Oregon JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
MARTIN HEINRICH, New Mexico STEVE DAINES, Montana
MAZIE K. HIRONO, Hawaii LISA MURKOWSKI, Alaska
ANGUS S. KING, JR., Maine JOHN HOEVEN, North Dakota
CATHERINE CORTEZ MASTO, Nevada JAMES LANKFORD, Oklahoma
MARK KELLY, Arizona BILL CASSIDY, Louisiana
JOHN W. HICKENLOOPER, Colorado CINDY HYDE-SMITH, Mississippi
ROGER MARSHALL, Kansas
Renae Black, Staff Director
Sam E. Fowler, Chief Counsel
Peter Stahley, Professional Staff Member
Richard M. Russell, Republican Staff Director
Matthew H. Leggett, Republican Chief Counsel
Kate Farr, Republican Counsel
C O N T E N T S
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OPENING STATEMENTS
Page
Manchin III, Hon. Joe, Chairman and a U.S. Senator from West
Virginia....................................................... 1
Barrasso, Hon. John, Ranking Member and a U.S. Senator from
Wyoming........................................................ 3
Heinrich, Hon. Martin, a U.S. Senator from New Mexico............ 5
WITNESSES
Culver, Nada Wolff, Deputy Director, Policy and Programs, Bureau
of Land Management, U.S. Department of the Interior............ 5
Gordon, Hon. Mark, Governor, State of Wyoming.................... 13
Vallo, Hon. Brian, Governor, Pueblo of Acoma..................... 99
Hollub, Vicki, President and Chief Executive Officer, Occidental
Petroleum...................................................... 113
Sgamma, Kathleen, President, Western Energy Alliance............. 120
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Alaska AFL-CIO:
Letter for the Record........................................ 156
Alaska Maritime Agencies:
Letter for the Record........................................ 158
Alaska Oil & Gas Association et al.:
Letter for the Record........................................ 160
Alaska Petroleum Joint Crafts Council:
Letter for the Record........................................ 163
Alaska Port Services:
Letter for the Record........................................ 166
ANCSA Regional Association:
Letter for the Record........................................ 168
ANCSA Regional Association and Alaska Native Village Corporation
Association:
Letter for the Record........................................ 171
Backcountry Hunters & Anglers et al.:
Letter for the Record........................................ 243
Comments for the Record...................................... 245
Barrasso, Hon. John:
Opening Statement............................................ 3
Cities of Utqiagvik, Wainwright, and Atqasuk (AK):
Letter for the Record........................................ 173
City of Utqiagvik Resolution #12-2021........................ 181
City of Wainwright Resolution 2021-26........................ 184
City of Atqasuk Resolution 2021-05........................... 187
Culver, Nada Wolff:
Opening Statement............................................ 5
Written Testimony............................................ 7
Responses to Questions for the Record........................ 217
General Steamship Agencies, Inc.:
Letter for the Record........................................ 190
Gordon, Hon. Mark:
Opening Statement............................................ 13
Written Testimony............................................ 15
Letter to Secretary Haaland, dated April 15, 2021............ 23
Report entitled ``The Fiscal and Economic Impacts of Federal
Onshore Oil and Gas Lease Moratorium and Drilling Ban
Policies'' by Dr. Timothy J. Considine, University of
Wyoming, dated December 14, 2020........................... 33
Responses to Questions for the Record........................ 227
Heinrich, Hon. Martin:
Opening Statement............................................ 5
Hollub, Vicki:
Opening Statement............................................ 113
Written Testimony............................................ 115
Responses to Questions for the Record........................ 233
Inupiat Community of the Arctic Slope:
Letter for the Record........................................ 192
Lujan Grisham, Hon. Michelle:
Letter to President Biden, dated March 15, 2021.............. 135
Manchin III, Hon. Joe:
Opening Statement............................................ 1
North Slope Borough (AK):
Letter for the Record........................................ 195
North Star Equipment Services:
Letter for the Record........................................ 202
Port Accounting and Logistic Services:
Letter for the Record........................................ 204
Sgamma, Kathleen:
Opening Statement............................................ 120
Written Testimony............................................ 122
Responses to Questions for the Record........................ 237
Southeast Stevedoring Corporation:
Letter for the Record........................................ 206
United States Department of the Interior:
Memo from Laura Daniel-Davis to Department Bureau Directors,
dated March 19, 2021....................................... 146
Vallo, Hon. Brian:
Opening Statement............................................ 99
Photo of Pueblo of Acoma, New Mexico......................... 100
Photo of Chaco Culture National Historical Park.............. 102
Written Testimony............................................ 104
Response to Question for the Record.......................... 230
Western Ocean Services:
Letter for the Record........................................ 208
(The) Wilderness Society:
Letter for the Record........................................ 252
Letter addressed to the U.S. Department of the Interior (with
appendices) providing recommendations for the comprehensive
review of the federal oil and gas program, dated April 15,
2021....................................................... 253
Appendix A: Oil and Gas Reform Toolkit....................... 284
Appendix B: APA Petition..................................... 296
Appendix C.1: Report entitled ``A Fair Return for the
American People: Increasing Oil and Gas Royalties from
Federal Land'' by Dan R. Bucks, March 2019................. 326
Appendix C.2: Report entitled ``Fiscal Responsibility in the
Management of Oil and Gas Leases on Federal Lands'' by Dan
R. Bucks, May 2020......................................... 342
Appendix D.1: Net Zero Framework............................. 388
Appendix D.2: Net Zero Framework Hypothetical................ 422
Appendix E: TWS Report on Land Hoarders...................... 434
Appendix F: Coal PEIS Comments............................... 443
ENERGY DEVELOPMENT ON FEDERAL LANDS, FOCUSING ON THE CURRENT STATUS OF
THE DEPARTMENT OF THE INTERIOR'S ONSHORE OIL AND GAS LEASING PROGRAM
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TUESDAY, APRIL 27, 2021
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:00 a.m. in
Room SD-366, Dirksen Senate Office Building, Hon. Joe Manchin
III, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. JOE MANCHIN III,
U.S. SENATOR FROM WEST VIRGINIA
The Chairman. Good morning.
I would like to thank everyone for being here today to
discuss the status of energy development on our public lands
and our federal oil and gas leasing program. In January, the
Administration announced the pause on new leasing while they
conducted a review of the onshore and offshore leasing
programs. During this review, only new leases and sales have
been paused, but oil and gas production has not been stopped.
In fact, I understand the BLM approved over 500 new permits to
drill in February and March. I would like to acknowledge that
this is an issue that brings a lot of passion and has very real
impacts on many of the states represented on this Committee.
Just as the Administration is conducting an evaluation of the
Department of the Interior's oil and gas leasing program, our
Committee needs to have a fact-based discussion to set a
baseline from which we can work to improve the federal energy
programs for all Americans.
I feel strongly that we need to maintain our energy
independence, use our abundant natural resources in the
cleanest way possible, and ensure a fair return for the
taxpayer when it comes to the federal resources. Our public
lands are used for multiple purposes, including energy
development, recreation, hunting and fishing, and conservation.
We absolutely need to be mindful of balancing these uses, and
be aware that the decisions we make impact many people in the
local communities surrounding our public lands. Onshore energy
production on our federal lands also plays a significant role
in our national energy portfolio, providing eight percent of
our oil and natural gas, more than 40 percent of our coal and
geothermal energy, and considerable wind and solar energy. This
energy development produced an average of $3.25 billion
annually in revenue for host states and the Federal Government
over the last five years through royalties, rents, bonuses, and
other fees. How and where that energy production takes place is
a key part of our jurisdiction on this Committee.
This energy development has wide-ranging impacts: from the
revenue it provides for both states and the Federal Government
and the jobs it provides, as well as its environmental impacts,
and the way it interacts with other potential uses for these
public lands. We need to take all of that into account as we
take a hard look at how the oil and gas programs are
functioning and what reforms might be appropriate, especially
given that we will be relying on fossil energy in some fashion
for the foreseeable future. I hope that the Administration will
do the same and take some of the discussion we have today into
account as they develop their report on this topic.
One area where I believe more work needs to be done is to
reduce damaging methane venting and flaring on federal lands.
Limiting this wasteful practice will mitigate the environmental
impact of this extremely potent greenhouse gas and also ensure
the taxpayers receive a fair return on their resources. In
2019, oil and gas operations on onshore federal lands vented or
flared 74, and I will repeat, 74 billion cubic feet of methane,
an 83 percent increase from 2015. I look forward to hearing
about the steps responsible producers are taking to reduce
venting and flaring, as well as what bottlenecks exist that
keep this gas from getting to market.
Now, as I have said before, I am all for innovation, not
elimination, and an all-of-the-above energy policy. And while
the focus of our hearing today is on the oil and gas leasing
program, one thing I think makes all the sense in the world is
increasing deployment of renewable energy on federally managed
lands where it makes sense. Unfortunately, our agencies have
not prioritized renewables or dedicated appropriate resources
to their development. The permitting process is slow and there
is not enough economic and regulatory certainty for the
renewable energy industry operating on federal lands. The
Energy Act of 2020 included several provisions to aid renewable
development, geothermal innovation, and accelerate appropriate
deployment on public lands. I look forward to hearing from the
BLM about how we might work together to pursue renewable energy
development on public lands.
Let me close with my belief that we are all entitled to our
own opinions, but we are just not entitled to create our own
facts to support those opinions. It is not productive to be
unrealistic when faced with these difficult issues. We are
certain to have a wide range of views on what reforms might be
appropriate for our public lands, but it is my hope that today
we can have a robust discussion about the current state of play
for energy development on our federal lands, and set a baseline
of facts from which to discuss reforms that Congress and the
Administration will consider going forward.
With that, I am going to turn it over to Ranking Member
Barrasso to give his opening remarks and to introduce one of
today's witnesses, Governor Gordon of Wyoming.
OPENING STATEMENT OF HON. JOHN BARRASSO,
U.S. SENATOR FROM WYOMING
Senator Barrasso. Well, thanks so much, Mr. Chairman.
Thanks for holding this important meeting.
And thank you, Governor Gordon, great to see you again.
Thanks for being here because, as you and all those watching
know, Wyoming is the energy capital of the United States. We
have it all--oil, natural gas, coal, uranium, renewables--all
of it. Wyoming's energy has powered this nation for decades.
Today, Wyoming and the Rocky Mountain West are under attack.
One of President Biden's first actions was to ban new oil and
gas leasing on federal lands. Make no mistake, this is not a
pause or a review. This is a ban, and currently there is no end
in sight.
So why did the President take this action? His
Administration is intent on ending oil and gas leasing on
federal lands. How do we know that? Well, President Biden
picked a Secretary of the Interior that was on record opposing
oil and gas production on federal lands. Since her
confirmation, she has said that federal oil and gas leasing is
``fundamentally broken.'' I completely disagree with her. Oil
and gas production on federal lands is subject to some of the
most stringent regulations in the world. That is the reason oil
and gas companies have long favored investing in state and
private lands instead of federal lands. Oil and gas leasing is
not broken, but it is harmed by existing regulations that
discourage investment in federal lands.
For decades, oil and natural gas and coal production on
federal lands has brought tremendous benefits to the people of
Wyoming and other western states. It has provided rural
communities tens of thousands of jobs at wages well above the
national average. Oil, natural gas, and coal production has
ended generational poverty for families in the West. It has
enabled Wyoming, New Mexico, and other states to provide high
quality K-12 public education and college degrees to tens of
thousands of young people whose families would not have been
able to afford it. These are benefits that solar and wind
energy will never be able to replicate. In 2019, oil and
natural gas leasing and production on federal lands generated
about $4.2 billion. Half of that money went to the federal
Treasury. Almost half of the money went back to western states.
More than a quarter of all the money went to New Mexico alone.
In contrast, wind and solar on federal lands have generated no
more than $22 million in any given year. So President Biden's
plan to end oil and gas leasing on federal lands will devastate
the economies and communities of Wyoming and New Mexico and
many other states.
The Biden Administration is represented at today's
hearings. I am afraid we are going to continue to hear the same
misleading statements that we have heard from this
Administration in the past. One of those statements is that
federal lands account for 25 percent of the nation's greenhouse
gas emissions. In fact, oil and gas operations on federal lands
release less than one percent of our nation's greenhouse gases.
Another misleading claim is that taxpayers are not getting
their fair share. Administration officials say that royalty
rates on state and private lands are higher than those on
federal land. They fail to point out or explain that the
permitting requirements and the restrictions on the use of
federal land are far more stringent and expensive to comply
with than those on state and private land. Increasing royalty
rates will only further discourage oil and gas companies from
investing in federal programs.
Finally, Mr. Chairman, we may hear that oil and gas
companies are stockpiling leases. Oil and gas companies cannot
just sit on leases. They must actively work to develop oil and
gas or return the leases to the Federal Government. That
process takes years in getting the permitting and the rights-
of-way needed to actually explore for the energy. But it is
well worth the time because energy production on federal lands
is critical to local communities, to western states, and to the
nation.
So, Mr. Chairman, I do want to thank you for holding this
important meeting and before we begin with the witnesses, I
would like to take a second to introduce Governor Gordon. Mark
Gordon has been serving as Wyoming's governor since January
2019. He and his wife, Jennie, own and operate the Merlin
Ranch, east of Buffalo. He has served as a member of the boards
of the Wyoming Wildlife and Natural Resource Trust, The Nature
Conservancy in Wyoming, and the Wyoming Environmental Quality
Council. Governor Gordon knows the critical importance of both
energy production and environmental protection. That is why
Governor Gordon is leading a lawsuit to combat the Biden
Administration's illegal ban on oil and gas lease sales on
federal lands. The people of Wyoming were not consulted before
President Biden signed his damaging Executive Order and
Secretary Haaland implemented it. Now the Biden Administration
will hear Wyoming's arguments both during this hearing and in
court.
Governor Gordon, it is a great honor to welcome you back as
a witness before the Energy and Natural Resources Committee. I
want to thank you for traveling from Wyoming to Washington to
be part of this important hearing today.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
And moving to our witnesses, today's panel will be able to
provide a variety of perspectives, and we really look forward
and want to thank each and every one of you, especially for the
efforts you made to be here, as we share all the concerns.
I will go through the witnesses we have with us today and
then I have Senator Heinrich, who is going to introduce
Governor Brian Vallo.
We have Nada Culver, Deputy Director of Programs with the
Bureau of Land Management.
We have Governor Mark Gordon, who has just been introduced
by Senator Barrasso.
And then we have Governor Brian Vallo, who Senator Heinrich
is going to introduce in just a minute.
We have Vicki Hollub, President and Chief Executive Officer
of Occidental Petroleum.
We have Kathleen Sgamma, President of the Western Energy
Alliance.
Senator Heinrich.
OPENING STATEMENT OF HON. MARTIN HEINRICH,
U.S. SENATOR FROM NEW MEXICO
Senator Heinrich. Thank you, Chairman, and I am quite
pleased to introduce my constituent, Governor Brian Vallo of
the Pueblo of Acoma, to the Committee today.
With over 30 years of working with tribal communities on
issues of historic preservation, tourism, NAGPRA statutes, and
museum development, Acoma Pueblo Governor Brian Vallo is
currently serving his third term in tribal leadership. He was
previously Director of the Indian Arts Research Center at the
School for Advanced Research in Santa Fe, New Mexico. Governor
Vallo was Founding Director of Acoma's Haak'u Museum and was
Director of Historic Preservation at Acoma. He is currently
consultant to the Metropolitan Museum of Art, the Field Museum,
and the de Young Museum.
Governor Vallo attended New Mexico State University, where
he studied business administration and marketing and later
studied anthropology at the University of New Mexico. Governor
Vallo is a steadfast advocate for Acoma Pueblo's cultural
heritage and has led efforts to protect pueblo sacred sites
across the Southwest. I am grateful he is able to join us today
and share his experiences with how the BLM manages oil and gas
development on public lands where there are important sacred
and cultural sites for tribal communities like Acoma.
The Chairman. Thank you, Senator.
Now we are going to turn to our witnesses' opening
statements and we will first hear from Ms. Culver.
STATEMENT OF NADA WOLFF CULVER, DEPUTY DIRECTOR, POLICY AND
PROGRAMS, BUREAU OF LAND MANAGEMENT, U.S. DEPARTMENT OF THE
INTERIOR
Ms. Culver. Thank you.
Chairman Manchin, Ranking Member Barrasso, and members of
the Committee, thank you for the opportunity to provide
testimony on the development of energy from federal lands and
the Bureau of Land Management's (BLM's) energy programs. I am
Nada Wolff Culver, BLM's Deputy Director for Policy and
Programs. This July, we will celebrate the 75th anniversary of
the BLM, which was established in 1946 with the merger of the
General Land Office and the U.S. Grazing Service. The BLM has
evolved over the years and adapted its mission to meet the
needs of our nation and serve as a steward of our public lands
and resources. We look forward to celebrating this milestone
and recognize that BLM-managed lands provide an opportunity to
address some of the nation's most pressing challenges,
including those related to energy development, climate change,
and transitioning toward a clean energy economy. The BLM
manages approximately 245 million surface acres located
primarily in 12 Western states, as well as mineral resources
across 700 million subsurface acres. Under our Multiple-use
Sustained-Yield mandate directed by Congress, the BLM manages
public lands for a broad range of uses, including renewable and
conventional energy development, livestock grazing, timber
production, hunting and fishing, recreation, and conservation,
including protection of cultural and historic resources.
President Biden issued Executive Order 14008, ``Tackling
the Climate Crisis at Home and Abroad,'' to restore balance on
public lands and waters, create jobs, and provide a path to
align management of America's public lands and waters with our
nation's climate, conservation, equity and clean energy goals.
The Order includes important direction for BLM's renewable
energy and oil and gas programs. For renewable energy, the
Order, along with the Energy Act of 2020, sets ambitious goals
to meet the urgent demands of the climate crisis and directs
the Secretary to identify ways to increase renewable energy
production on public lands. The BLM's initial efforts include a
proposal for the establishment of renewable energy coordination
offices as well as other ways to prioritize permitting energy,
renewable energy development, and associated transmission. The
EO also pauses oil and gas leasing on public lands and in
offshore waters while the Department conducts a comprehensive
review of federal oil and gas permitting and leasing practices,
including looking at royalty rates and climate impacts.
For years, the Government Accountability Office (GAO) has
identified the federal oil and gas programs as ``high risk''
for fraud, waste, abuse, and mismanagement, and recommended a
comprehensive review. GAO has consistently recommended program
improvements, including for bonding, where rates were set in
the 1950s and '60s, and royalty rates are currently set at 12.5
percent, a rate set in 1920. GAO has also highlighted non-
competitive leasing, lease suspensions, and ensuring a fair
return to taxpayers. As part of the ongoing review, we are
considering how to remediate the problems identified by GAO as
well as the legal shortcomings that have led courts to overturn
numerous lease sales and BLM guidance. We are also receiving
feedback from tribes, governors and local governments, and
through outreach to stakeholders and recently held a forum that
featured a diverse range of perspectives. To be clear, as we
are conducting the review, industry continues to produce from
existing operations while submitting new drilling permits.
Since January, we have approved over 500 permits to drill.
Today, less than half the federal acreage under lease is in
producing status and operators currently possess nearly 8,000
available and approved drilling permits, ready for use, with
about 5,600 more submitted for consideration.
It is worth reiterating that we manage the public lands and
their multiple uses for all people. As Secretary Haaland has
stated, ``Fossil fuels will continue to play a major role in
America for years to come.'' However, this is just one of the
multiple uses for which the BLM manages public lands. Too
often, the extraction of resources has been rushed at the
expense of people, wildlife, and other uses. While we look back
with pride on the evolution of federal land management and the
economic contributions from public lands over the last 75
years, we simply cannot continue doing business as we have in
the past. It is incumbent on us to look forward, adapting to
the changing landscapes, climate, environment, and
technologies. We have an opportunity to rebalance, bring
meaning to the concept of sustained yield, and ensure that we
manage our lands and resources not merely across fiscal years,
but across generations. Together we can meet the challenges of
our time.
Thank you again for the opportunity to be here today and I
look forward to your questions.
[The prepared statement of Ms. Culver follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Ms. Culver.
Next we have Governor Gordon of Wyoming.
Governor Gordon.
STATEMENT OF HON. MARK GORDON,
GOVERNOR, STATE OF WYOMING
Mr. Gordon. Thank you, Chairman Manchin, Ranking Member
Barrasso, and members of the Committee. Good morning and thanks
for the opportunity to meet with you today. Greetings from the
people of Wyoming.
We can probably agree that last year sucked economically,
socially, and emotionally. Wyoming never had to completely shut
down, so our schools and businesses remained open but our
overall economy took a hard hit, particularly in the oil and
gas industry. I cannot talk about my state without mentioning
coal. Mr. Chairman, you and Ranking Member Barrasso know coal
well and how important it is to our states' economies. Thank
you for remembering that burning fossil fuels is not the
problem. It is concentration of CO2 in the
atmosphere that is the most urgent and critical task of this
generation. Thank you for last week's hearing on carbon capture
to promote federal support for commercial deployment of CCUS.
This technology is essential.
I recently announced that Wyoming will work day and night
to achieve negative net-zero carbon emissions across the whole
spectrum of energy using wind, solar, nuclear, hydrogen, and
fossil fuels. We are working hard to be home to the next
commercial CCUS facility. Today I speak about Wyoming's oil and
gas industry and how it has been challenged by this
Administration's misguided policies. Last August, for what I
understand to be the first time in our state's history, no rigs
were operating in Wyoming. Today there are seven, down from 34
in February 2019. In October of that year, our Department of
Workforce Services reported 13,100 oil and gas related jobs. By
October 2020, that number had dropped to 7,200. This leasing
review is a crafty way of establishing a moratorium on federal
lease sales, making continued progress ever more tenuous, more
difficult, and making it more likely that good-paying, family-
supporting jobs will migrate somewhere else. That is bad for
this country, for the climate, and especially for Wyoming.
Wyoming ranks first in natural gas production on public
lands and second in oil. That production from federal acreage
is vital to our economy, generating $457 million last fiscal
year. Approximately $5.7 million of that is from lease sales.
How much has Wyoming received from lease revenues this year?
None. The climate goals of the Biden Administration can best be
achieved through more consultation with governors and that can
be done without decimating our economies. The heart of
enlightened, responsible policy lies in fully understanding all
of its consequences. This moratorium discriminates against the
people of Wyoming, against all western states with federal
leases within our borders. Eight western states will stand to
lose $2.3 billion in investment, $872 million in production
value, and $345 million in tax revenue in this first year of
the moratorium. In people terms, that is less funding for
schools, healthcare, public safety, and other essential
services. This moratorium is absolutely unnecessary. A
comprehensive, thoughtful and meaningful review can certainly
be done without halting an entire leasing program.
Federal lands are not over-leased. Moreover, leases are not
stockpiled in Wyoming. Developing a resource responsibly means
leasing must be thoughtful, strategic, and forward-thinking. It
may take a company several years and multiple sales to gather
enough leases to allow the organized development of an entire
field that minimizes subsurface disturbance and avoids waste
and stranding assets. Conversely, a pause on leasing can set
back and disrupt orderly development for years, to no one's
benefit.
Wyoming is known for its energy production and magnificent
environment. We have the largest stable population of sage-
grouse, and that has not been without effort. We have
implemented effective mechanisms to offset development of wind,
solar, coal, oil, and gas resources--not without effort or
expense--and my state boasts the longest mule deer and
pronghorn migrations on the planet. We have implemented a
policy that focuses on siting subsurface disturbances outside
valuable migration corridors. This moratorium does nothing to
advance these multi-use policies or the valuable wildlife
protections that we all--NGO's, communities, landowners, and
the state--have worked so hard to implement in partnership with
industry.
I close in citing Wyoming's stellar record regarding
flaring methane emissions and plugging wells. Thank you.
[The prepared statement of Mr. Gordon follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Governor Gordon.
Now we are going to hear from Governor Brian Vallo, the
Governor of the Pueblo of Acoma in New Mexico.
Governor Vallo.
STATEMENT OF HON. BRIAN VALLO,
GOVERNOR, PUEBLO OF ACOMA
Mr. Vallo [Speaking in Native language.]
Good morning, Mr. Chairman and honorable members of the
Committee. I appreciate this opportunity to provide this oral
testimony this morning. My name is Brian Vallo and I am the
Governor of the Pueblo of Acoma in New Mexico. Acoma is
considered the oldest continuously inhabited settlement in
North America.
[Photo of Pueblo of Acoma follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Mr. Vallo. Thank you for conducting today's hearing as part
of Congress' ongoing oversight of Interior's onshore oil and
gas leasing program and the President's call to review these
practices under Executive Order 14008. Acoma Pueblo, along with
the All Pueblo Council of Governors, on which I serve, has
consistently expressed grave concerns about oil and gas
development threatening our cultural resources, particularly
those surrounding Chaco Culture National Park in New Mexico. My
testimony shares Acoma's perspective on why Interior's policies
need to be reformed, along with a vision for positively
conducting these activities going forward, using a proven
method of effective collaboration called the Acoma Rapid
Ethnographic Assessment (AREA).
Our pueblo has been involved in reformation efforts since
2014. Interior's oil and gas leasing practices have contributed
to the desecration of sacred sites and cultural resources
outside pueblo land holdings, including the areas surrounding
Chaco Canyon, a UNESCO site recognized for its remarkable
density of archeological treasures and traditional cultural
properties, or TCPs, that are formative to our pueblo identity.
[Photo of Chaco Culture National Historical Park follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Mr. Vallo. Energy development in the Greater Chaco region
has accelerated to alarming speeds, with approximately 91
percent of available federal land having been leased by BLM to
date. It would be impossible to list the many instances in
which BLM has routinely failed to fulfill its legal obligations
under Section 106 of the National Historic Preservation Act,
NEPA, and federal consultation requirements in the time
allotted. Each instance, however, has direct and potentially
irreversible negative impacts on the preservation of our
cultural heritage. We simply cannot ensure the protection of
our cultural and sacred sites on federal and public lands under
current conditions. Something must change.
Our pueblo believes that the start of any meaningful
reformation of existing Interior practices must be informed by
tribal consultation. To that end, my written testimony lays out
several concrete recommendations for this Committee's
consideration. I will briefly discuss our recommendation to
adopt the Acoma Rapid Ethnographic Assessment, or AREA, model
tier. The AREA model is a process for ensuring early and
consistent tribal participation in private and federal agency
review processes for proposed projects with tribal
implications. It rests on proactivity. The acting entity works
collaboratively with relevant tribes at the outset of a
project, instead of mid-project when National Historic
Preservation Act review usually takes place, as has happened in
the Greater Chaco region.
The result is significant cost savings and time savings for
all parties involved. Our pueblo has successfully used this
model in relation to a proposed uranium mine on our sacred
Mount Taylor and for a CO2 pipeline with Kinder
Morgan across tribal lands. Kinder Morgan and the BLM
approached us at the beginning of planning the pipeline's
route. Our tribal experts worked side-by-side with company
personnel to design and implement cultural resource surveys and
a routing study. Kinder Morgan covered our actual costs on a
reimbursement basis and signed confidentiality agreements
regarding our cultural properties. Ultimately, the entire
process took only six weeks from start to plotted route, saving
the company significant time on legal compliance and money on
what may have otherwise been unworkable routes. We were also
respected as a tribal sovereign with guaranteed protection for
our cultural resources. A full 60 percent of the properties
identified during the project would not have been recognized by
archeologists untrained in Acoma traditions. We believe the
AREA model is a viable, low-cost, mutually beneficial path
forward in reforming Interior oil and gas leasing practices.
We would welcome the opportunity to discuss the model
further with you, your staff, and the Interior. Thank you for
this opportunity to provide this testimony. Dawa'ee. Thank you.
[The prepared statement of Mr. Vallo follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Governor Vallo.
And next, we are going to hear from Ms. Vicki Hollub,
President and Chief Executive Officer of Occidental Petroleum.
Ms. Hollub.
STATEMENT OF VICKI HOLLUB, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, OCCIDENTAL PETROLEUM
Ms. Hollub. Chairman Manchin, Ranking Member Barrasso,
members and staff of the Committee, thank you for the
opportunity to be here today. I have worked in the oil and
natural gas industry for all of my career, starting in 1981
with Cities Service Company. I have had the privilege of
working in oil and gas producing states in the United States--I
think most of them --and worked in many around the globe. Since
becoming CEO of Occidental, my focus has been on successfully
positioning our company to transition into the low-carbon
economy that's to come. We were the first U.S. oil and gas
company to establish comprehensive net-zero greenhouse gas
goals. And we have a pathway now to get to net zero for scopes
1 and 2 by 2040 and an ambition to achieve net zero for scope 3
emissions by 2050.
We all know that the demand for energy and energy products
will continue to rise globally and we take seriously the charge
to provide for the needs of those demands while approaching net
zero. I would like to share some of the things that we are
doing to accomplish this. Last year, we announced our plan to
build the world's largest commercial-scale direct air capture
facility. That facility, to be located in the Permian Basin,
will remove up to one million tons of CO2 from the
atmosphere each year. Scaling this type of technology gets us a
step closer--a big step closer--to the net-zero barrel of oil
and provides balance for those industries that have
traditionally difficult emissions to decarbonize, like maritime
and aviation. And we know that our approach to climate change
must be extensive, impactful, and immediate. So we have
initiated numerous partnerships with those that are in ethanol,
cement, natural gas, and other industries to capture and
permanently store CO2. Also, advanced battery
storage will require scale-up of critical minerals production
capacity. So we have entered into a joint venture with
TerraLithium to develop technology that extracts lithium from
brine.
In 2019, we also began operating a first-of-its-kind solar
farm--120 acres of it in Texas--that directly powers some of
our oil and gas operations, delivering for those operations a
lower-carbon-
intensity oil. And we are excited about a pilot plant that we
are starting with Cemvita. Cemvita has harnessed the science of
ripening bananas to turn CO2 into bioethylene. And
we were an early investor in NET Power, which just announced
plans to build two zero-emission natural gas power plants in
the U.S. These near-term, large-scale steps demonstrate our
continued commitment to decrease emissions while providing
essential energy and products that transition our society to a
low-carbon future.
Now, with respect to onshore development in the U.S., it
provides the opportunity to generate a lower-carbon-intensity
product that can be meaningful as a part of the energy
transition. To that end, Administration action should provide
regulatory certainty in the short- and long-term. Production of
oil and natural gas on federal lands is highly regulated and
subject to strict environmental protections. And as Senator
Barrasso said, some have suggested that we stockpile acres, and
this simply is not true. The Mineral Leasing Act already
requires operators to expeditiously develop federal leases and
prevents a company from locking up excessive federal acreage.
Federal leases grant the right and impose the obligation to
evaluate the potential to produce commercial quantities of
hydrocarbons. In fact, ``use it or lose it'' is already the
law. Permitting of these operations takes a significant amount
of time and investment. Federal onshore drilling permits take
up to a year to get approval, which requires companies like us
to plan 18 months ahead of drilling operations. Lack of clarity
or permitting guidance can extend these times, often increasing
the cost and the surface disturbance.
Onshore development remains an important generator of jobs
and revenues as well. The oil and gas sector has one of the
highest average wages of any sector in the U.S., normally more
than 50 percent higher than the national average. Median total
compensation for domestic Occidental employees, not including
overtime or benefits, is over $125,000 per year. And in 2019,
the oil and gas industry contributed $740 million in funding
for K-12 education in Wyoming and 40 percent of the money in
New Mexico's General Fund comes from oil and gas revenues. Last
year, Congress passed the Great American Outdoors Act, which
directs revenue from oil and gas development on federal lands
to fund the Land and Water Conservation Fund (LWCF) and to pay
for maintenance needs in our national parks. The LWCF has
supported local parks and recreation projects in almost every
county of the nation. So this means wherever you are, there is
support for and benefits for your county. Now, we need to
continue this onshore development because it means higher
paying jobs, community reinvestment, and the energies and
products needed to get us through the transition.
So with that, I want to conclude just to thank you all for
what you have done on CCUS and for the fact that without 45Q,
we would not be able to do the projects that we do today. We
wouldn't be advancing the technologies that the world needs to
address our energy future.
Thank you.
[The prepared statement of Ms. Hollub follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Ms. Hollub, thank you very much.
Finally, we have Ms. Kathleen Sgamma.
Kathleen.
STATEMENT OF KATHLEEN SGAMMA,
PRESIDENT, WESTERN ENERGY ALLIANCE
Ms. Sgamma. Thank you Mr. Chairman, Ranking Member
Barrasso, and members of the Committee, it is my pleasure to be
here today. Western Energy Alliance represents about 200
companies engaged in all aspects of environmentally responsible
oil and natural gas development in the West. We are
independents. We are proud to operate on federal lands in a
responsible manner and we have an average of 14 employees. So
lots of small businesses, lots of employees.
In the West, oil and natural gas resources are inextricably
bound to federal public lands and therefore, to the men and
women in the industry who work there. As much as we would like
to avoid federal lands because of their extensive red tape and
time-consuming process, it is nearly impossible to develop oil
and natural gas in the West without touching some federal lands
or minerals, even when you try to site your development off
those federal public lands. And the interlocking land ownership
of the West, with tribal/Indian allottee, private, state, and
federal all kind of mixed together, it means that just about
every project in the West has to get a federal lease, a federal
right-of-way and/or a federal permit. But with that attachment
to the land, we take our public land stewardship very
seriously. We are proud that oil and natural gas on federal
lands is done in a balanced manner and that we continually
reduce our footprint on the land. We reduce our methane
emissions. We reduce that impact so that we do take care of the
land. In fact, development on federal lands, which represents
federal lands and waters, which together represent about 22
percent of oil and 12 percent of natural gas production, only
produces about 0.6 percent of greenhouse gas emissions, not the
``nearly a quarter'' that we constantly hear from the
Administration as justification for this leasing ban. So there
is quite a bit of difference between 0.6 percent and nearly a
quarter.
But we are not content with even that low emissions
profile, and through the relentless pursuit of better and more
efficient technologies, the industry has significantly reduced
methane emissions. In fact, we have reduced them 23 percent
since 1990, even as we have increased natural gas production by
71 percent. Fuel switching to natural gas is the number one
reason the United States has reduced more greenhouse gas
emissions than any other country since 2000. We have reduced
more emissions than wind and solar combined since 2005. And we
have helped achieve that balance on federal lands. If you take
the 700 million acres of mineral estate that BLM manages, we
lease less than four percent of that, and when you look at
actual surface disturbance, it is about 0.07 percent. So we
think that is a very great balance between protecting the land
and achieving a substantial energy resource. In fact, leased
acreage is at near historic lows. It hit the lowest level since
1985 during the Trump Administration at 2.5 million acres. It
is up slightly, but that actual footprint on the land is less
than 500,000 acres. And we are also very proud that we are
almost exclusively the source of funding for conservation and
infrastructure on federal lands under the Great American
Outdoors Act. Along with coal, we provide that funding--the
Land and Water Conservation Fund is funded exclusively from
offshore oil and natural gas development, and I don't really
think that President Biden knew when he signed that Executive
Order that he was putting at risk $2.8 billion annually in
conservation funding.
So we see the Administration talk about this leasing ban as
a pause. But when we look at the comprehensive review that
they're planning to do, we don't see that as a pause, we see
that as possibly years-long. And in just the first year of the
Biden Administration, 32,700 jobs will be lost according to a
study out of the Wyoming Energy Authority. By the end of the
Biden Administration, if that ban continues, we would see those
job losses rise to 58,000 annually and about $33.5 billion in
economic activity in eight western states, where 97 percent of
the federal oil and natural gas production is done. So that is
why we are concerned about the ban. That is why we have joined
the State of Wyoming in the Wyoming District Court. I look
forward to your questions.
Thank you very much.
[The prepared statement of Ms. Sgamma follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Ms. Sgamma.
We will begin our questions now and I will start. Ms.
Hollub, both you and Ms. Sgamma mentioned that the perception
that oil and gas companies are stockpiling leases is incorrect.
I know the percentage of leases that are actually producing has
increased steadily over the last 20 years, in part because of
technological innovations like horizontal drilling. Despite
that, there are still over 13,000 leases representing nearly 14
million acres that are not producing oil and gas. To the
average American that might seem like the industry has what it
needs to continue production without too much interruption. On
average, how many undeveloped leases does Occidental hold in a
given year and has that varied over time? And maybe you can
help us better understand what is going on with these leases
that are not producing.
Ms. Hollub. Yes, I would say the most federal acreage that
we have is in New Mexico and Wyoming. And in New Mexico now, 80
percent of our production in the State of New Mexico is from
federal leases. What we do on our leases, and what the industry
in general needs to do to ensure that we capture the value and
maximize the value for both ourselves and for the Federal
Government, is that we go through a process of evaluation that
begins with scoping out a general area to lease. We then put
that lease----
The Chairman. How long does it take you to get from
securing a lease to where it goes into production?
Ms. Hollub. From the time we get a lease to the time that
we can get it on production in a prudent way that maximizes
values can be anywhere from three to four years. And the reason
for that is the subsurface work that's required. We typically
will shoot
3-D seismic, which gives us a picture of the subsurface. We
then have to validate that 3-D seismic with a few wells, do the
calibration process, and get the model set to begin to maximize
drilling. And the reason that it's so critically important that
the industry does this is that without a good development plan
for the entire area, not just piecemeal--and I think somebody
mentioned that the industry went too fast in some cases to
develop acreage. That is not the way that we should do our
developments.
Doing our developments on federal acreage the way I'm
talking about will not only recover more of the subsurface
hydrocarbons, but will recover it in a more efficient way that
maximizes value, but also diminishes our footprint and gives us
the opportunity to design a development with a lower number of
vessels because what we really need to do is to minimize the
leak points and make sure that we minimize emissions.
The Chairman. Thank you so much. I am so sorry. We have
limited time, but we will get back to this. It is a great,
great panel here.
Under the current system, it makes no sense to me at all
when a lease sale is held, and this is for Ms. Culver, if
nobody purchases a lease, anyone can come in and buy it for the
next two years without paying a bonus bid. With so many parcels
going unsold over the last few years, there are now
approximately 1,500 parcels containing more than four million
acres currently available under the non-competitive lease
provisions. Particularly with annual rent of $1.50 an acre,
forgoing the bonus bids can be a loss to the taxpayer and hurt
the states that would receive these monies.
So I don't know how that's done. We don't do that with the
coal properties. Why is it done with gas and oil? And why do we
continue that?
Ms. Culver. Thank you, Senator.
As you noted, right now under the Mineral Leasing Act, if
leases are not sold at a competitive sale, they are available
for two years at non-competitive sales. This is essentially an
over-the-counter transaction, $1.50 an acre, and they do not
come with a bonus bid or other----
The Chairman. Why is that still allowed?
Ms. Culver. The Mineral Leasing Act directs the BLM to do
this.
The Chairman. I got you.
Ms. Culver. As the General Accounting Office has noted, we
receive three times the income from leases purchased
competitively, and leases purchased competitively and with
higher bonus bids are much more likely to actually be developed
than leases----
The Chairman. So you would not object if we made some
changes to that?
Ms. Culver. We would appreciate some guidance from Congress
and also to address the concerns the GAO has cited on this----
The Chairman. We would love to work with you.
Anyone on the panel have comments on that, that leasing
process?
Governor. Just push that button. It will eventually come
on.
Mr. Gordon. Thank you, Mr. Chairman. Sorry, the button is a
little bit reluctant to accept my gesture.
One of the big issues, I think, that has demonstrated
itself over the last couple of years, Mr. Chairman, is the fact
that there's so much uncertainty at this point with federal
leasing. There are lawsuits that make almost every leasing
opportunity problematic. And so it makes it very difficult to
plan, as Ms. Hollub said, for a rational and logical approach
to development.
Thank you.
The Chairman. Thank you. My time is expired.
Now I will go to Senator Barrasso.
Senator Barrasso. Thanks so much, Mr. Chairman.
Governor Gordon, you mentioned uncertainty. You know, it is
a difficult time. It is difficult to overstate the importance
of jobs in the oil and natural gas industry to families, to
communities in Wyoming, New Mexico, and other western states,
they cannot afford to lose all of these oil and gas jobs. Can
you discuss the impact of oil and gas jobs on communities and
families across the West?
Mr. Gordon. Thank you, Mr. Chairman, Ranking Member
Barrasso.
Oil and gas jobs really make up the bulk of jobs in many of
our communities in Wyoming, as you know, everything from oil
field services, those small businesses that provide parts and
equipment and pipe and so on, to ancillary services like water
hauling and so on. They provide field men, mineral consultants,
regional wildlife consultants, and other jobs--all high-paying
jobs. For a young person coming out of high school in Wyoming,
as I think was mentioned here, they can get a high-quality job
and start a career, which is really important. Those jobs are
essential to the basic services of any community, from schools,
to cafes, to the retail stores and so on. And as I say, it
provides valuable income. It provides a community that has some
purpose over time.
One of the challenges, I think, with renewables is that
they are sort of ``one and done.'' They kind of come in, get
built. There is maybe a little bit of a legacy crew that's
there to sort of take care of some things, but oftentimes you
end up sort of pulling the guts out of a small community. So
oil and gas jobs, Ranking Member, are absolutely essential.
Thank you.
Senator Barrasso. Well then, you talked about the impact on
families and in the communities. Let's talk about the
importance of oil and gas revenue to states--to Wyoming, to New
Mexico, to other western states. I know you have been talking
to the New Mexico Governor. You are also a member of the
Western Governors' Association. Do other governors share the
concerns that you have talked about in terms of President
Biden's actions that are going to limit the ability to provide
essential services--things like public education? You talked
about essential services to residents of their states, as you
talked to additional governors.
Mr. Gordon. Yes, thank you, Mr. Chairman and Ranking Member
Barrasso, I have to say that it was somewhat heartening to
reach out to fellow governors. I think we had 17 on a letter
and it was a bipartisan letter basically saying that this
leasing ban is detrimental to all of our states. And
particularly, I have had the opportunity to work with Governor
Michelle Lujan Grisham over the last several months to talk
about the importance to both Wyoming and New Mexico for funding
our education system, for making sure that these jobs don't
migrate to states that don't have the same kinds of federal
restrictions, and so on. And I think, you know, one of the
things to remember in all of this is that New Mexico, Colorado,
Wyoming, Utah, and North Dakota have all established very
strong regulatory programs, and coupled with the federal
leasing programs, these guarantee that resources are developed
under the most stringent kinds of guidelines. When federal
leasing is put at risk, those jobs migrate to places where
there aren't those restrictions and where there's much more
private land.
So actually, I think, both onshore and offshore, Mr.
Ranking Member, I have to say, there is a lot of governor
support for not continuing this leasing ban.
Senator Barrasso. So Ms. Culver, on March 19th, Laura
Daniel-Davis, who is a political appointee, issued a policy
memo which effectively extended the Secretarial Order. The
order transferred authority over oil and gas permitting
decisions from the career staff at the BLM, who normally make
these decisions at the BLM state and field offices and took it
out of their hands and said, nope, political appointees at the
BLM in Washington are going to make this decision instead of
the career staff that have made these historically.
So as a result, we are now seeing delays in permitting
decisions on existing leases. Why is it necessary for this
Administration to act in this way for political appointees to
make routine permitting decisions usually made by the career
staff, including decisions on applications to extend permits to
drill and when will this March 19th policy memo expire?
Ms. Culver. Thank you, Senator.
The March 19th memo followed the end of the term of
Secretarial Order 3395, which did impose a temporary
requirement for many decisions to be approved through the
Department. The March 19th memo identifies categories of action
for which advice will be given so that the Secretary has an
opportunity to inquire further, if desired, through the
Assistant Secretary's office. There are not currently approvals
being required through the Assistant Secretary's office. That
authority has been delegated back to the field after the
initial review was occurring. Under this current memo, the BLM,
from the field up, do provide regular updates as to their
activities and intended activities and that is the way that the
Assistant Secretary's office traditionally oversees the Bureau
of Land Management operations and that's how this is set up. It
is not a formal approval process. It is an opportunity for
inquiry and an advice as to intended actions.
Senator Barrasso. Mr. Chair, my time is expired.
The Chairman. Senator Heinrich.
Senator Heinrich. Thank you.
Governor Gordon, you mentioned the negative impact that
frivolous lawsuits have on certainty in the industry. Given
that the Department of the Interior is currently involved in a
public process around oil and gas leasing reform, why did
Wyoming resort immediately to litigation and why should we view
that as merited as opposed to frivolous?
Mr. Gordon. Thank you, Mr. Chairman, Senator Heinrich.
The question you raise really goes to the merits of why we
are having this leasing moratorium. I think in my testimony I
spoke about a number of the advancements we have made in
protecting critical wildlife habitat, et cetera. Those all come
with stipulations for development. So, for instance, the
greater sage-grouse--for which Wyoming has the only stable
population, in fact it's slightly growing--an endangered
species, is very important. I know, and Ms. Culver also knows
about this--there is a longstanding program that was
established in Wyoming that has stipulations as to when and how
development can occur. A large corporation or a small,
independent driller has very much the same issues of
mobilization and cost if there's no predictability----
Senator Heinrich. But why go immediately to litigation
rather than engage the Administration?
Mr. Gordon. Thank you for that, Mr. Chairman, Senator
Heinrich. The reason is that the moratorium was extended and we
see no end in sight and as contrary to what has been said here,
there is still very uneven application of permissions that are
being granted from the BLM. So it seems getting clarity on this
is absolutely critical.
Senator Heinrich. Thank you, Governor.
Governor Vallo, why does it matter to the Pueblo of Acoma
whether oil and gas development occurs on public land?
Mr. Vallo. Thank you, Mr. Chairman, Senator Heinrich. I
appreciate that question.
You know, one of the things to understand is that Native
American people, while we may be confined to reservation land
and have the opportunity to manage affairs on our own tribal
lands, there is a landscape that is indigenous to our present-
day cultures and those landscapes are very important to the
continuance of our culture and our traditions and our life
ways. And so, we are always concerned when these types of
developments are occurring on lands outside of our boundaries.
And I'll use Chaco as an example--that Chaco Canyon and that
Greater Chaco landscape, which is quite vast, is all very
important to the life way of the Acoma people. We return based
on solar and lunar cycles. I, myself, as a member of the Sun
Clan, will return at different periodic times of the solar
cycle to various places on that landscape. And we have other
cultural leaders who are engaged on a much more frequent level
to return to these areas for maintenance of our culture.
Senator Heinrich. Governor Vallo.
Mr. Vallo. Yes.
Senator Heinrich. Have those cultural resources, in your
view, been adequately taken into consideration by the Bureau of
Land Management, historically, when leasing parcels around
Chaco Canyon?
Mr. Vallo. Mr. Chairman, Senator Heinrich, thank you for
the question.
I would say no, unfortunately. You know, we have been
engaged in ongoing discourse and negotiations and some
consultation regarding this very problem that our requests and
our input in this is oftentimes overlooked and we are
oftentimes, you know, settling for only temporary protections,
temporary agreements for access to these areas. There has not
been an effort to secure these resources over the long-term.
Senator Heinrich. Governor, thank you for that testimony.
Ms. Culver, before my time runs out, we have heard a lot
about the Land and Water Conservation Fund from some of our
witnesses today. How much of the revenue in the Land and Water
Conservation Fund is generated by oil and gas leasing on
Western public lands?
Ms. Culver. The Land and Water Conservation Fund is
primarily funded from offshore leasing, Senator.
Senator Heinrich. Thank you.
Senator Barrasso [presiding]. Before turning to Senator
Lee, I would like to introduce a letter for the record. On
March 15th of this year, New Mexico's Governor wrote President
Biden expressing concern about the economic impact of his oil
and gas leasing ban on that state. The governor explained that
financial losses resulting from the leasing ban, ``could have
real impacts on our ability to achieve major goals like
universal access to early childhood education.''
I ask unanimous consent to enter the Governor of New
Mexico's letter to the record.
And without objection, it will be done.
[Letter from the Governor of New Mexico follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Senator Barrasso. Senator Lee.
Senator Lee. Thank you.
Ms. Hollub, I would like to start with you. We have
Administration officials and some special interest groups that
have repeatedly said that the pause on oil and gas leasing will
have no impact on businesses or local economies because, as
they put it--as they describe it, the industry has ``stockpiled
leases.'' Can you briefly speak to that assertion?
Ms. Hollub. Yes, as I said earlier, about four percent of
the federal leases available are oil and gas. So of the federal
mineral estate, four percent is oil and gas. And of that four
percent, 50 percent of the leases that we have today are
producing oil and gas. The other 50 percent are in some stage
of development. That stage of development takes a lot of work
initially, as I was describing, to set up an optimum
development program that ensures the prudent development and
the maximization of the value. So there is a process that must
be taken and now we have, as was mentioned earlier, we have
almost the lowest of all-time leasing--oil and gas leases--on
federal acreage.
And so, given where we are today and the fact that we have
much more advanced technologies--but these technologies take
time and then the permitting takes time. So we're three to four
years into the lease, into a federal lease before we can begin
activities. And so it may seem to some people that nothing is
going on, but a lot is going on, on these leases as we learn
more about them and as we prepare our development programs.
Senator Lee. Thank you.
Governor Gordon, the President's Executive Order calls for
this moratorium and review to address potential climate
impacts, but do you believe this is going to lead to decreased
oil or gas consumption in the United States?
Mr. Gordon. Thank you, Mr. Chairman, Ranking Member, and
Senator Lee.
No, I do not believe it is going to decrease the amount of
consumption of oil and gas. Market conditions are going to
change, but it is clear to me that for the foreseeable future,
oil and gas will be a very important part of our energy mix.
Senator Lee. So in other words, you are saying we will
consume whatever quantity of oil and gas that is--for which
there is demand, and if there is less production from U.S.-
owned lands, it is just going to be made up for somewhere else?
Mr. Gordon. Senator Lee, yes, I believe that to be the
case. And let me also state that while we talk about
electrification of our fleet, there's quite a bit of question
about how practical that is, particularly in western states
with large areas. And then we have hydrogen, which can be an
alternative fuel that can help meet greenhouse emission goals--
that can be produced from natural gas. So I think there will be
increasing demand at the same time that consumer demand and
efficiencies may make a little bit of a decrease.
Senator Lee. Thank you.
Ms. Culver, as the U.S. District Court for the District of
Columbia recently recognized, if a resource management plan
authorizes oil and gas development on certain federal land
parcels, the Bureau of Land Management must sell leases for
those parcels on a quarterly basis, and this is not just based
on something a judge contrived, this is what the law requires
under 30 U.S.C. 226(b)(1)(A) and 43 CFR 3120.1-2. So this is
what the law requires. Now this seems to be inconsistent with
the President's moratorium or pause. Can you briefly explain to
me under what applicable laws the BLM has halted the oil and
gas leasing program?
Ms. Culver. Thank you, Senator, for the question.
Right now, we are operating under an Executive Order issued
by President Biden that directs us to pause leasing on federal
lands while we conduct a comprehensive review of the program.
Under the Mineral Leasing Act, the Secretary of the Interior
has discretion to determine whether or not to lease nominated
lands and to determine which lands are eligible and available
for leasing. That discretion has also been delegated to the
Bureau of Land Management, and I believe that the courts have
upheld this discretion, including the discretion not to lease
nominated parcels all the way up to the Supreme Court. So that
is the authority we are operating under right now.
Senator Lee. Okay. It is important that we follow the law
there, and the law, as I read it, requires these things to
occur quarterly. I know I am almost out of time.
Ms. Hollub, I want to ask you one more question. You
mentioned that Occidental was the first U.S. oil and gas
company to establish comprehensive net-zero greenhouse gas
emissions goals. Can you expand on what efforts you have taken
to reach that goal?
Ms. Hollub. Yes, we have entered into agreements with an
ethanol producer to take the CO2 emissions from
their plants and get it to the Permian for sequestration. We
also have an agreement with a cement plant in Southern
Colorado. We have announced the plan to build the world's
largest direct air capture facility in the Permian Basin. We
have the FEED study underway. We will begin construction next
year. We have also invested in NET Power, which is, I mentioned
earlier, is a net-zero-emission, gas-fired, electrical
generator. And so it's the first of its kind. We also are
working not only just on carbon capture and sequestration, but
we're working on other ways to use carbon. We have entered into
a joint venture with Cemvita in Houston to actually produce
bioethylene from using ripening bananas to convert the
CO2. That will begin a process where we can start to
use photosynthesis for converting CO2 on a large
scale to bioethylene.
In addition, we are trying to help the car industry with
electric vehicles because we are trying to provide a cheaper
source of lithium by investing in a technology that actually
extracts lithium from brine water. So that's the other thing
that we're doing. This is all above and beyond what we do in
our own operations to ensure that we are reducing emissions
there. And we have done a lot that would take me quite a
while--and I know I'm out of time--to address that. But in our
own operations, there are a lot of steps that we have taken to
reduce methane, both from a flaring standpoint and from routine
operations through the design of our facilities and
implementing more aggressive analysis of potential leak points
and starting to take those out of the system.
Senator Barrasso. Thank you. And thank you, Senator Lee.
Senator Cortez Masto.
Senator Cortez Masto. Thank you. Thank you so much, Mr.
Chairman, Ranking Member, for this conversation.
Ms. Culver, let me start with you.
Let's talk about areas where there is low or no potential
for any type of development. How does the leasing of low- and
no-potential lands negatively impact our land use, like
recreation, renewable energy development, and other activities,
and what solutions would you propose?
Ms. Culver. Thank you, Senator, for the question.
We have determined that low-potential lands are more likely
to be included in and acquired through non-competitive lease,
and therefore less likely to go into production or to generate
revenues. The vast majority of our revenues from the program do
come from producing leases, not from rents. So they are much
less likely to contribute to the Treasury and to states. At the
same time, lands that are leased are less likely to be able to
be managed for other uses, so they can interfere in that way.
Senator Cortez Masto. So Ms. Culver, I have a bill that is
called the End Speculative Oil and Gas Leasing Act, and it
prohibits leasing on lands with no or low potential for
development, and reprioritizes the management of those lands.
And one of the reasons is because it is also a waste of time
for the BLM to take the time to determine that if it is low- or
no-potential if they already know that and there is a lot of
speculative leasing going on. Here is my concern, you know, we
have the pristine Ruby Mountains in Nevada, and there was
speculative leasing that was purchased right around the Ruby
Mountains--54,000 acres of National Forest System land was
actually proposed for oil and gas leasing. Now, we know that
there was no oil, or there was low potential for oil there, but
it was still put out for potential oil and gas leasing. And
this was an individual who was not even from Nevada--had no
involvement. It was probably a broker, which there are a lot of
those brokers, but it is taking the time of BLM now to have to
assess that, along with the concerns that we want to use and
prioritize that land for other options.
And so my concern is, why are we letting speculators engage
in any type of leasing if we know there is no potential for it
or there is low potential for it? And let me give you an
example. You know, I understand that a recent investigation
found that a woman from Myanmar purchased about a quarter of
all the federal acreage sold at lease sales held during the
pandemic, including over 31,000 acres in Wyoming. This woman
had no prior experience in oil and gas development and has
already tried selling some of these drilling leases off at
inflated prices.
So let me ask, Governor Gordon, shouldn't the Interior
Department start taking better precautions to curb speculation?
Mr. Gordon. Thank you for that, Senator, Chairman, Ranking
Member Barrasso.
Wyoming is a dual regulation state. And so, anybody who
chooses to develop in Wyoming has to seek permits from both the
Bureau of Land Management and from the Wyoming Oil and Gas
Conservation Commission. We take an extensive look at the
viability of the operations and make sure that those leases are
well-documented and properly adhered to. One thing I would say
is that oil and gas is not the only area where speculation can
occur. Wind development and solar development--it happened
there as well----
Senator Cortez Masto. No, I understand that, but right
now--and I don't mean to cut you off. I only have so much time,
Governor, and I really appreciate you being here because I am
trying to understand, but--and maybe this is a question for Ms.
Hollub. Do you agree it is unfair for Wyoming taxpayers to have
their lands leased for as little as $2.00 an acre just for
someone with no interest or experience in oil and gas
development to flip them for a profit, or is that something
that is just normal course and we should let that happen, even
though it is tying up land where we know there is low or no
potential for oil and gas?
Ms. Hollub. I would say that oil and gas has been developed
in the past in areas where for years we didn't know that there
was any potential. So it would be hard for me, without knowing
of the particular situation, to make a judgment on what someone
else is doing. I would say that it's, since you do have to pay
a fee on an annual basis, there are not too many companies I
know of that would hold acreage that was not speculative and
that didn't have, in some way, have some potential for oil and
gas and I'm speaking from an oil and gas perspective here, not
from any other potential use of the acreage. We wouldn't hold
it----
Senator Cortez Masto. Thank you. Can I stop you there? I
have one final question because, and I want to talk with Ms.
Hollub because I am trying to understand. When you talked about
stockpiles of leases, please explain to me why the 50 percent
that you talked about that are in some stage of development is
somehow running afoul of the Executive Order that the President
issued because the Executive Order he issued was a pause on new
leases. So that Executive Order would not impact the 50 percent
that are in some stage of development, isn't that correct? Or
am I missing something?
Ms. Hollub. What you're saying is correct, but what I'm
talking about is 50 percent of the oil and gas leases today
produce, another 50 percent are under evaluation. If the
leasing process does not continue then we will get behind on
development of oil and gas in the United States. So it's an
important thing.
Senator Cortez Masto. No, I understand that, but there is
no indication that 50 percent leasing is not continuing. You
just said it is in some stage of development and it is
continuing, correct?
Ms. Hollub. The leasing has stopped as far as I'm aware of.
Senator Cortez Masto. The new leases?
Ms. Hollub. The new leases.
Senator Cortez Masto. But what you, and I am just trying to
understand this----
Ms. Hollub. Maybe what----
Senator Cortez Masto [continuing]. Because we don't have
oil and gas in our state. My understanding is the pause is for
new leases, but what you said--50 percent of leases in this
country are in some stage of development. That would not stop
that stage of development for those 50 percent, correct?
Ms. Hollub. The 50 percent would need to get permits to
continue the development. So as you're holding the acreage,
you're evaluating it and then you have to put your plan
together and then you have to get the permit to drill the
wells.
Senator Cortez Masto. Correct, I understand that.
Ms. Hollub. So it's the permitting process.
Senator Cortez Masto. I appreciate it. I know my time is
up. I appreciate what you are saying. I just, I needed to
understand that the Executive Order is not impacting those
leases and from my understanding it isn't, because those are
old leases not new leases. But if I am incorrect in that
statement, please let me know. I will submit my questions for
the record. Thank you.
The Chairman [presiding]. Thank you, Senator.
Senator Daines.
Senator Daines. Well, they say it is impacting us. I mean,
Senator Murkowski would say the same thing. These new leases,
it is a long process here and it is creating great problems
right now as we think about our long-term future.
Chairman Manchin, thank you.
Just last week, President Biden and Interior Secretary
Haaland announced they extended their oil and gas leasing
moratorium and canceled this quarter's mandatory lease sales in
Montana and around the United States. This Administration has
now put a stop to two mandatory lease sales and there appears
to be no end in sight and this decision greatly affects
Montana. In fact, according to a recent study, oil and gas
supports over 33,000 permanent, high-paying jobs in Montana,
average wage is $71,000. Let me tell you something, that is 1.5
times greater than our average wage in Montana. It also
provides millions of dollars of revenue for Montana
communities, helping fund schools, public safety, and roads. I
toured a very small community in Southeast Montana, graduating
class size of six. They have a beautiful, brand new gymnasium
that they love to host basketball tournaments in. I asked the
superintendent of the schools, how in the world did you fund
this new gymnasium in this public school? He said 94 percent of
our tax revenues for this school come from pipelines--that is
tied directly to our oil and gas.
Now, this Administration has said that this pause, in fact,
does not impact current leases in production, but let me be
clear, they fail to tell you it will have a major impact on the
revenue that states like Montana and others will receive
because states like Montana receive half of all the royalties,
rents, and bonuses generated from oil and gas on federal land.
Bonuses come during lease sales, the same lease sales that
President Biden has halted. And in Montana, it's a significant
amount of money.
Ms. Culver, what is this Administration's plan to make up
for the lost revenue and jobs that the leasing ban is causing
in states like Montana?
Ms. Culver. Thank you, Senator.
Right now, we do not see a major loss in revenue. As I
mentioned in my testimony as well, the majority of income comes
from royalties from producing leases. And right now, the
industry has approximately 7,900 permits available, ready to
use for drilling. The BLM has approximately 5,599--so I guess
that's not approximate--additional permits that have been
submitted for consideration. We know of over 7,400 wells that
have been drilled and are ready to be completed and have not
yet. So when we look at those numbers, we look at the math. We
see the----
Senator Daines. Do you realize the chilling effect? Do you
realize the chilling effect you are having in terms of these
companies are thinking about long-term? These are
entrepreneurs. When you cancel it, that is sending a chilling
message to the industry that basically this is just step one
here of eventually stopping oil and gas leasing on public
lands.
Ms. Culver. Right now, we are directed to pause leasing
while we conduct a comprehensive review, which we are doing to
ensure that any changes that need to be made to these policies
can be made so that future decisions will withstand judicial
review.
Senator Daines. And do they have an appreciation for how
much time it takes, in terms of the upfront investment in
exploration and so forth and what you--they sent a very clear
shot over the bow that oil and gas leasing is not welcome. And
I am just--it is having a huge effect. The promise of future
possible jobs, new revenue is little consolation. I can tell
you the union workers that already lost their job or the
schools are now having to make cuts because they are seeing
declines in these revenues.
There has been a push by some lawmakers and environmental
groups to increase royalty rates on federal oil and gas
development. According to a recent GAO report, increasing
royalty rates would lead to an increase in federal revenue and
a decrease in production. While this may be a win for President
Biden, this is a loss for rural communities in places across my
State of Montana. You have caused production to move away from
rural, low-producing areas and concentrate in just a few
places, again, leaving eastern Montana out to dry and killing
important jobs created by oil and gas in these very rural
communities who need the help the most.
Ms. Sgamma, can you explain how increased royalty rates is
a bad decision for rural, smaller Western communities?
Ms. Sgamma. Well, Senator, I think you said it well there.
I think when some of these reports look at just increasing the
royalty rates, they forget that when you tax something, you get
less of it. And so the Federal Government has chosen to extract
more in process and regulatory costs than it can command in
royalty rates. Now, if we had a stable environment on federal
lands, like we do in the State of Texas or in North Dakota, off
of federal lands, then, you know, sure, maybe the Federal
Government could command a higher royalty rate. But with all of
the extra cost on federal lands, raising the royalty rate would
just continue to transfer jobs and production away from small
communities, rural communities in the West to other areas of
the country.
Senator Daines. Thank you, Ms. Sgamma.
The Chairman. Thank you, Senator.
Now we have Senator Hickenlooper.
Senator Hickenlooper. Thank you, Mr. Chair. I appreciate
all the time and effort of each of our panelists.
I want to start with Ms. Culver. A recent EPA report had
some startling data that there are roughly 2.8 million
abandoned oil and gas wells that have emitted about 280
kilotons of methane. We know that over a 20-year period,
methane is very harmful to the environment, and we have over
90,000--almost 100,000 wells operating right now on public
lands, but we don't right now have a system for tracking how
many of those wells have been orphaned or would be orphaned.
And I think there is significant threat to the environment, to
wildlife, to people.
So how can the BLM better track and make sure that these
wells are not abandoned without being properly abandoned, if
you know what I mean? If you could explain that, if you want to
go there.
Ms. Culver. Thank you, Senator.
The BLM does currently do some tracking of wells and we
coordinate with other agencies to identify and assist with
cleaning up orphaned, abandoned, and idled wells across the
federal estate. The President has asked for $450 million for
addressing orphaned wells and abandoned mine lands in his
Fiscal Year 2022 budget proposal and the BLM would certainly be
part of that and we feel that we have the ability to continue
tracking these wells. One of the challenges is different
definitions within the BLM, across the federal estate on what
counts as an orphaned well or an idled well or an abandoned
well and these all do overlap, and that is an area where we
would like to do additional analysis and definition and would
really appreciate working with Congress on that as well.
Senator Hickenlooper. Great, thank you so much.
And I guess I could ask everyone on the panel. Let's start
with Ms. Hollub. There are a number of different proposals to
try and put some sort of a price on carbon and allow companies
like your own that are really making a serious effort to reduce
carbon emissions and to do so dramatically. Do you favor any of
these? You don't have to get specific, but do you favor finding
some sort of a price on carbon, whether it is a fee and a
dividend system or, you know, some variation of that? I can
just very briefly let each of you go down the line.
Ms. Hollub. Just quickly, I would say that I favor what is
being done today, the help with 45Q, and what would help even
more with 45Q is what has been put forth by some of the
Senators on this Committee and that is to expand 45Q to provide
direct pay and more value for direct air capture because I do
believe it is this kind of program, 45Q, that will develop
technology. A price on carbon would come too late for us and a
price on carbon will be built by the market in time, but today,
to have the incentives in place, that enables us to advance
this technology and to advance it faster than waiting on a
price of carbon or some carbon tax. So we like what's happening
today with 45Q and I think that it will help us to
commercialize the technology for others to adopt.
Senator Hickenlooper. Anyone else want to chime in?
Mr. Gordon. Thank you, Mr. Chairman, Ranking Member.
Senator Hickenlooper, nice to fly back with you yesterday.
Wyoming, what I would say is very much along the lines of
what Ms. Hollub just mentioned. The concern that I think our
state
has is that the price of carbon be durable and that it be a
market truly established between a consumer and a producer. And
by that I mean that we have a marketplace that functions and is
incentivized, that allows people to properly price for
agricultural work that's done to sequester carbon, for things
like carbon capture and sequestration, and is not sort of
rooted in administrative policies that can come and go or
buying absolution. It really should be in direct carbon capture
and there should be a price associated with it.
Senator Hickenlooper. Great. I am, unfortunately, out of
time, I can see. So I will yield my time back to the Chair.
Thank you.
The Chairman. Thank you, Senator.
And now we have Senator Lankford.
Senator Lankford. Mr. Chairman, thank you very much. Thanks
to all of you for your testimony today.
Ms. Culver, I want to get a chance to sink in a little bit
more on this letter that went out from the Department of the
Interior on March the 19th, you referenced it before, to be
able to talk through.
[The letter from the Department of the Interior follows:]
[GRAPHIC] [TIFF OMITTED] T4471.118
[GRAPHIC] [TIFF OMITTED] T4471.119
Senator Lankford. Help me understand, just to clarify on
this, no decision can be made on the field office without
reaching out to the Assistant Secretary. They have to be able
to review it first to be able to come back. Is that correct?
Ms. Culver. The way the process works is, it is part of the
regular reporting of what is expected in the field offices.
Senator Lankford. But the field office may not make a
decision without DC actually signing off on it. Is that correct
or not correct?
Ms. Culver. There's not a formal sign-off process.
Senator Lankford. So this says the final decision, for
matters that have been submitted in accordance with S.O. 3395,
but for which you have not received a final Assistant Secretary
of Land and Minerals decision, you may not proceed without
approval, without the Assistant Secretary of Land and
Minerals--that is in the little reminder section at the end of
it. And then it walks through at the very beginning of it in
saying, ``for review prior to taking final action on the
matters or publicly announcing decisions.'' So before they can
publicly announce a decision or before they can take final
action on anything, it has to come to the Assistant Secretary
and they need to wait. Is that correct?
Ms. Culver. So the language at the end that you started
with is related to decisions that were already in the queue at
the time that that order ended. So when Secretarial Order 3395
ended----
Senator Lankford. Right.
Ms. Culver [continuing]. There were some decisions that
were already in the queue and we felt that there was clarity
needed on what to do with those.
Senator Lankford. Right. So they cannot make a decision on
those. That has to wait. The earlier decisions that this letter
supersedes also states to them that they cannot make that
decision in the field office, it has to come from the Assistant
Secretary's office. This is just a yes or no on it.
Ms. Culver. It's a regular course of business review,
Senator----
Senator Lankford. Okay.
Ms. Culver [continuing]. So that the Secretary's office has
an opportunity to inquire if the Assistant Secretary would like
more information on this topic.
Senator Lankford. So in the past the field office could
make decisions or could not make decisions?
Ms. Culver. In the past, in similar ways, the BLM has
always provided a look-ahead to headquarters and to the
Assistant Secretary's office on upcoming activities so that
there was an opportunity for review and to ask----
Senator Lankford. So the field office could make decisions
or could not make decisions without a sign-off in the past?
Ms. Culver. There was not a formal sign-off in the past.
There is not a formal sign-off now. There is----
Senator Lankford. There is not a sign-off, but it's a
``don't make a decision until we tell you.''
Ms. Culver. The part at the end that you read only applied
to questions that were already in the queue when the
Secretarial Order expired.
Senator Lankford. I get that, but it also applies at the
very beginning of this letter. I am not trying to be
contentious. We are just trying to provide clarity. This is the
question that everybody has, is what does this letter mean?
This letter appears to mean that no decisions can be made in
the field office until DC signs off, DC has not decided when
they are going to sign off yet, we will get back to you when we
start making decisions on it, we are doing a comprehensive
review, as you have mentioned. Is that correct or not?
Ms. Culver. That is not correct, Senator.
Senator Lankford. Okay.
Ms. Culver. This is the way the BLM has operated before
under previous administrations and under this Administration.
There are regular updates provided so that if the Assistant
Secretary or headquarters has further inquiries they can make
them. It is not a formal sign-off and that----
Senator Lankford. Did the field office make a decision on a
right-of-way decision in the past?
Ms. Culver. Yes, and it would go up through an advisory
process before it was finalized, so if there was a question,
the regular reporting would provide that opportunity before it
was finalized. It's not a formal sign-off.
Senator Lankford. So can a field office make a decision on
a right-of-way now?
Ms. Culver. It's the same as it was before. If a right-of-
way would be included in an update, if it met the category in
that memo----
Senator Lankford. Right, so----
Ms. Culver [continuing]. Then it would go through that
advisory.
Senator Lankford. So help me understand. What's different
about--why is this memo needed then if this is exactly the same
as it has been in the past?
Ms. Culver. That memo was necessary because of the end of
Secretarial Order 3395, to indicate that there was no longer a
formal approval process and to highlight the specific
categories of actions that this Assistant Secretary's office
would like to ensure were included in the update.
Senator Lankford. So every company should assume things now
are functioning on leases, on right-of-way, on all the long
list of approvals for permits here, exactly the same as it was
in 2019? It is the same, no different than it was in 2019?
Ms. Culver. Each administration has a different type of
information they want and different types of activities that
they are looking at, but the process is the same, yes, for
review.
Senator Lankford. But you are saying there wasn't a sign-
off in 2019, there isn't a sign-off now. It is functioning the
same now as it was before?
Ms. Culver. The function of regular reporting with an
opportunity to ask for more information is the same process
that we were using before.
Senator Lankford. Ms. Hollub, do you have any questions on
the functioning of how things will operate on federal lands at
this point that's different than 2019?
Ms. Hollub. I'm sorry, was that a question to me?
Senator Lankford. Yes, ma'am.
Ms. Hollub. Well, I would say that a few days after the
letter, 300 extension requests were sent in by our industry
that I'm aware of and not any of those have been approved yet.
Twenty-six of those were ours. These are sundry addition or
lease extension requests that would have been pretty typical
and routine in the past that have not yet been approved.
Senator Lankford. So things seem to be significantly
different than what they were before.
Ms. Hollub. This appears to be different to us.
Senator Lankford. Mr. Chairman, thank you.
The Chairman. Thank you, Senator.
Now we have Senator King.
Senator King. Thank you, Mr. Chairman.
Ms. Hollub, as you know, and I want to get on to some other
larger questions, but a specific question, as you know, methane
is a particularly potent greenhouse gas. As you know, one of
the great sources of methane is fugitive emissions from
drilling. The Obama Administration put restrictions on that
release. The Trump Administration issued a rule to essentially
lift those restrictions. We have a motion on the Floor of the
Senate, I think this week, to rescind the rescinding. You are
nodding. What is your company's position on that action?
Ms. Hollub. We support the direct regulation of methane
just for the reasons you said, that it is very potent and we
need to have regulation in place to ensure that we have
adequate controls throughout the industry. We support that.
Senator King. So you would urge us to vote yes on this
resolution to restore the direct regulation?
Ms. Hollub. We support doing that, yes.
Senator King. Thank you.
Ms. Culver, another sort of quick question. Listening to
these various exchanges, as I gather, there is no direct effect
on revenues from leases because of the moratorium because that
is future-
looking. Right now, there are leases that have not even begun
to be developed in the queue, if you will--in the industry
queue. So when will the states and the industry see a decline?
In other words, what is the lag time here?
Ms. Culver. Thank you, Senator.
As you mentioned, we do have 13.9 million acres currently
under lease that are not yet in development and are in the
process that could be developed. In addition, we do have
thousands of permits issued and also pending.
Senator King. So how long will it take before there is a
real monetary impact of this moratorium, assuming for a moment
that it continues indefinitely?
Ms. Culver. Right, so the monetary loss right now is new
bonus bids and additional rents from leases. However, the vast
majority, as I mentioned, of income comes from producing leases
from royalties. We do not anticipate a significant effect on
income to states and the Treasury in the near future during
this current pause.
Senator King. Can you define near future? Several years?
Ms. Culver. There have been reports issued that identify
periods of several years. We have not yet undertaken that
specific estimate.
Senator King. Thank you.
Governor Gordon, welcome. I served as Governor of Maine
alongside Jim Geringer of Wyoming. I hope you will give him my
very best regards when you are back in the state. The jobs loss
issue is really tough and I understand that. I have lived
through, in my state, some wrenching industrial changes, lots
of jobs lost. However, that happens because of changes in the
economy. Shouldn't we be talking more about how to reskill and
reemploy those jobs rather than trying to change the direction
of where the economy is headed? An example is coal. Coal has
largely gone into a serious decline because of natural gas and
the replacement of coal plants with natural gas plants. Talk to
me about--and I really understand what you are talking about--
those are good, high-wage jobs, but the economy changes. We had
good, high-wage jobs in Maine doing a lot of other things 50
years ago, we don't have them anymore.
Mr. Gordon. Thank you, Mr. Chairman, Ranking Member
Barrasso, and Senator King. My mother grew up in Kennebunk when
it was a shoe factory place.
Senator King. There were 30,000 jobs in shoes in 1970 in
Maine, now there may be a thousand.
Mr. Gordon. Absolutely correct.
In Wyoming we, in fact, have stepped up, recently announced
a new initiative which will tie the university to our community
colleges so that many of our workers can up-skill and get more
certifications and more opportunities. All of these industries
are evolving and we want to make sure that our workforce has
the ability to meet that. When we're talking about, you know,
``transitioning'' from coal to renewables, we--and this is
something Governor Lujan Grisham and I----
Senator King. The major transition was from coal to natural
gas. Your state benefited from that and this guy's state didn't
benefit.
Mr. Gordon. Well, thank you, Senator. What I would say is
no matter what you do in energy, somehow, you're going to do it
in Wyoming. And so, for us, we want to make sure we have a
nimble workforce that can meet those needs, but what I will say
that is important is that the pay for those jobs changes. There
is not a one-for-one opportunity for jobs. This is something
that Michelle Lujan Grisham, Governor of New Mexico, and I have
talked extensively about. How do we build that economy over
time? And I think there are chances to do that. Doing something
as extraordinarily Draconian as we are with the policies of
this Administration doesn't give us time to evolve.
Senator King. I think the time is an important point and
orientation toward transition is important as well.
Thank you very much, Governor, I appreciate your making the
trip. Thank all of you for joining us today.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Hoeven.
Senator Hoeven. Thank you, Mr. Chairman.
Deputy Director Culver, my question is for you. With the
moratorium on leasing on federal lands, please tell me what the
status of that is?
Ms. Culver. Right now, we have a pause on leasing while we
conduct a comprehensive review of the oil and gas program,
looking at the fiscal aspects as well as the climate impacts.
Senator Hoeven. How long do you anticipate that taking?
Ms. Culver. Right now, we are conducting the review.
Senator Hoeven. How long do you anticipate that taking?
Ms. Culver. Right now, we are conducting the review. I
don't have a specific time to give you.
Senator Hoeven. So last year, just in the State of North
Dakota for 2020, Interior disbursed over $66 million in
revenue. So what is the revenue impact on this moratorium going
to be on the states and the Federal Government as well for
revenues it receives from energy development on federal lands?
Ms. Culver. Since the majority of revenue that we receive--
and it goes to the states--comes from producing leases on
royalties, we anticipate that looking at the amount of lands
under lease, the amount of permits, the thousands of permits
that have been issued and the thousands of permits that are
under consideration, as well as the leased lands available, we
do not anticipate a significant impact on income in the near
future.
Senator Hoeven. Well, but you just said thousands of leases
under consideration.
Ms. Culver. Those are the permits.
Senator Hoeven. So if those are not able to proceed,
wouldn't that create a significant revenue impact both for the
states and for the Federal Government? And the states share
that revenue with the counties as well.
Ms. Culver. Indeed, they do. And what I said was there are
approximately 7,900 permits that are issued and available for
use right now to drill and produce and another 5,600 permits
that we are considering to issue.
Senator Hoeven. Do you expect imports of oil to go up or
down if we stop developing oil and gas on federal lands?
Ms. Culver. That is not an assessment I have made, but I
would be happy to look into it for you.
Senator Hoeven. I'm sorry, could you say that again----
Ms. Culver. I said that is not an assessment that I have
made right now. We will be continuing to evaluate the impacts
of the program as the comprehensive review continues.
Senator Hoeven. So if we are not able to develop oil and
gas resources in this country, will that shift production to
countries like Russia and to Saudi Arabia and Venezuela that
have lower environmental standards than we do?
Ms. Culver. Right now, we don't see a slowdown on
development in our country based on the 13.9 million acres of
leases that have not yet been developed as well as the 12.7
million acres that are currently being developed.
Senator Hoeven. So you don't think having a moratorium on
leasing on federal lands will slow down development--that is
your position?
Ms. Culver. What I can tell you is the math and the facts--
that we have thousands of permits available for drilling and
millions of acres of land that can be developed right now.
Senator Hoeven. Do you realize that if you were a mineral
owner in North Dakota and you owned the surface acres, but that
if you share some of that mineral ownership with federal--with
Interior, and Interior has no surface acreage, that your
moratorium would prevent that private landowner from developing
his mineral interests?
Ms. Culver. I know that our pause does not affect non-
federal acres or minerals. So private acres, tribal acres are
not affected.
Senator Hoeven. Not tribal acres, but I am talking about
privately-owned mineral interests, even where you have no
surface acreage, but you have an interest as well, a partial
interest in those minerals. You are preventing someone from
developing their minerals. Do you realize that?
Ms. Culver. Thank you, Senator.
My understanding is our pause only affects the federal
minerals.
Senator Hoeven. Okay, well then, we should talk some more
about that because remember--mineral interest--you share
mineral interest in some of these tracts based on spacing unit
with other owners. You are aware of that?
Ms. Culver. Yes, I am. And I would be happy to talk about
it with you further.
Senator Hoeven. Okay.
Governor Gordon, what would you say is the impact of this
moratorium in terms of lost revenues and so forth?
Mr. Gordon. Thank you, Mr. Chairman, Ranking Member, and
Senator Hoeven. It is dramatic. In my testimony I mentioned a
couple of those numbers--$5.7 million of that from lease sales
alone, lease bonuses et cetera, and that's significant in our
state. I want to compliment North Dakota and Doug Burgum, your
Governor, for their leadership on carbon capture and
sequestration.
But returning to the topic, one of the biggest issues that
I see--and I see this because I serve on our Oil and Gas
Conservation Commission--is, as a field develops, issues like
flaring become more important. We need to make sure that
infrastructure can be built out to new development. If that new
development is uncertain, the build-out probably doesn't
happen. It doesn't allow us to capture the flares and that is
something that Wyoming has been particularly--and I know North
Dakota, as well--has been particularly aggressive in making
sure that we don't see excessive flaring.
Senator Hoeven. Right, and that would be my final question,
which is, Governor, both in our state and your state, it is not
just about producing more energy, aren't we also putting the
latest technologies out there to also garner better
environmental stewardship, and that includes development on the
federal lands, does it not?
Mr. Gordon. Absolutely, Mr. Senator. The technology has
improved dramatically over the last decade or two. We can now
drill horizontally--much better technology. It is much more
expensive and the capital at risk is much more of an issue. So
having some dependability about how you're going to be able to
develop those leases is absolutely essential. What that does to
the uncertainty that is put into our program because we don't
know when these leases will be able to be purchased again
really causes a lot of concern for our development.
Senator Hoeven. Right. And that includes things like carbon
capture, which both of our states, as you said, correctly so,
are working very hard to do and really lead the way forward on
it.
So thank you for your leadership, Mr. Governor, and thank
you, Mr. Chairman.
The Chairman. Thank you, Senator.
Senator Kelly.
Senator Kelly. Thank you, Mr. Chairman.
Ms. Culver, I understand that half of onshore oil and gas
revenue collected by DOI is distributed to states, while the
other half is intended to enhance federal conservation programs
in western state water projects. Arizona is not an oil-
producing state, but the natural gas extracted in Senator
Heinrich's state and Senator Barrasso's state helps pay for the
water projects along the Colorado River in the State of
Arizona. If your review extends beyond the summer, does
Congress need to prepare for budgetary impacts to the
Reclamation Fund?
Ms. Culver. Thank you, Senator.
In the immediate term, including through the summer, we do
not expect significant impacts to the amount of money in the
Reclamation Fund based on the amount of permits that have
already been issued, the amount of drilling permits that are
under consideration, and the amount of land that is under lease
on which permits can continue to be issued and generate
revenue.
Senator Kelly. And when do you think those budgetary
impacts would occur if the review wasn't completed, let's say,
by the fall?
Ms. Culver. We do not expect to see significant budgetary
impacts in the short-term.
Senator Kelly. Well, thank you.
And Ms. Culver, in a few decades, fossil fuels will not be
the backbone of our energy economy. Do we--does Washington--do
we need to start rethinking policies that use fossil fuel
revenue to fund the federal water and conservation projects?
Ms. Culver. Well, certainly, for projects like these, those
in the Land and Water Conservation Fund and those in the
Reclamation Fund and the maintenance backlog, we would
certainly welcome working with Congress to ensure those are
funded, regardless, going forward.
Senator Kelly. Great. I think we need to do that.
Ms. Hollub, so I think we agree that methane leakage in oil
and gas production, transportation, and storage is a problem.
You know, methane is around 30 times more potent than
CO2 as a greenhouse gas. NASA satellites can
visually detect plumes of methane from human sources, and the
largest hot spot right now that they found in the United States
was an accumulation of industrial emissions over the Four
Corners region. What are your thoughts on the support from
companies like BP, Exxon, and Shell for restoring EPA's
regulation of methane?
Ms. Hollub. I can't speak for the other companies, but I do
believe that our industry organizations are supporting, in some
cases, the regulation of methane directly. I know that API has
made a commitment to help member companies initiate best
practices throughout their operations. And so we have a
voluntary program, but we have a lot of companies involved in
ensuring that we are doing the best we can to manage our
methane, but we, Oxy, I can say that we support the direct
regulation. We support the vote tomorrow to go in support of
the CRA to go back to more stringent regulations around
methane.
Senator Kelly. Do you feel that the majority of companies
in your industry are now supportive of that?
Ms. Hollub. I haven't taken a poll, so I really can't say,
but I do know that we do have a growing industry support--a
growing support within the industry for methane regulation. And
I think that some of the companies, or at least, I'm sure, that
a few other companies have already come out in support of the
vote tomorrow to approve that. So I think the support is
growing, but certainly our industry has, over the last couple
of decades, made significant strides to improve the technology
and to improve the way we design our equipment to start to
minimize what's happening with methane.
Senator Kelly. Well, thank you for doing that and thank you
for your answer.
And I yield back the remainder of my time.
The Chairman. Senator Murkowski. Thank you, Senator.
Senator Murkowski. Thank you, Mr. Chairman, I appreciate
the hearing this morning.
Ms. Culver, to you--National Petroleum Reserve. What is it
in that title, that was created back in 1923 under the Harding
Administration, that would suggest that this would not be an
area that we would look to as a nation for petroleum resources?
Ms. Culver. Thank you, Senator.
Under the National Petroleum Reserve Production Act, we are
managing that area under an integrated activity plan and are
directed to consider both development of oil and gas and
protection and conservation of other resources in that area.
Senator Murkowski. It is the largest single tract of
federal land in the entire country. Its primary purpose is to
satisfy the energy needs of the United States. So it has been
pretty consistent with that. I would like to understand if you
are suggesting to me then that, with the reviews that are part
of this pause, there is some consideration within this new
Administration that within the NPR-A, this primary purpose,
which is to satisfy the United States' energy needs, whether
you believe that this is now something different.
Ms. Culver. We have not made any such decisions and we are
conducting a review of the entire program. There is ongoing
permitting for projects in the National Petroleum Reserve-
Alaska.
Senator Murkowski. I understand that.
So others have suggested that the pause has a chilling
effect, to use Senator Daines' terms. I certainly believe that.
I would ask you--I have 18 letters, Mr. Chairman, that I am
going to submit for the record--18 statements of support for a
particular project within the NPR-A, you are probably well
aware--the Willow Project.
[Letters of support for the Willow Project follow:]
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Senator Murkowski. This is a project that has been under
review for multiple administrations, beginning within the Obama
Administration. It has gone through a process that most would
consider to be extraordinarily extensive. It has the support,
not only from the Native people, the Inupiat people of the
North Slope, but from our unions, from Alaska shipping and
maritime industries, the list is pretty extensive. And when you
look through some of these letters, and it is because of not
only the resource that it promises, but some 2,000 construction
jobs--about 75 percent of them would be well-paying union jobs,
$2.3 billion in revenue for the state, $7.6 billion in federal
royalties. Not insignificant.
`Today In Energy' notes that oil production in Alaska
reached its lowest level in more than 40 years. What we are
producing now, I had an opportunity to speak on the Floor last
week, but Russia is providing more oil to this country than
Alaska is currently. I have suggested that that is not a
trajectory that I want to go down. One of the things that is
really quite concerning to me though, as I read these letters,
is the fact that the Native people, who live and work and raise
their families in this region, feel that they have not had an
opportunity to be heard on this, that this decision for this
review and this pause was made without consultation.
So a direct question to you is, prior to this pause and the
halt, effectively, of the Willow Project and the other ongoing
projects within the area, did the Department consult with
Alaska Native representatives in these areas that are closest
in proximity to the land and the projects where these decisions
are going to be impacted?
Ms. Culver. Thank you, Senator. I appreciate the question
and understand the importance of this industry to Alaska and
your concerns for this. President Biden issued the Executive
Order. Since the issuance of the Executive Order, we have been
consulting with tribes, including this week, in depth.
Senator Murkowski. So you are saying that you are
conducting consultation with the tribes now, but you are doing
this after you have halted or paused the review. Is that
correct?
Ms. Culver. The Executive Order was issued in January and
we're engaging in consultation now. We have not halted
permitting, but we have halted--we do have a pause on leasing.
Senator Murkowski. Well, you have a pause on leasing. The
Willow pause has been in place now for 100 days. I had an
opportunity to speak directly with Secretary Haaland about what
a pause means on any kind of activity when you are operating in
the North Slope. For my colleagues, whether you are in Montana
or Wyoming or Oklahoma, your reality is you can put it on a
pause and you are going to be okay. In Alaska, our season is
limited to several months. You know that. You understand that.
This is a concern and a consideration that, again, is
extraordinarily concerning.
I have one quick add here and it relates to public land
orders, the PLOs. I do not know whether you have personally
received a briefing from the Alaska BLM Office regarding these
PLOs. The BLM took unilaterally and, in my view, legally
questionable action to pause and reopen the administrative
record on these completed PLOs. I do not know what the
authority is. I have asked for it. I have not gotten anything.
Secretary Haaland has said we do not intend to hold up the
distribution or the process for Native allottees, our Alaska
Native veterans who are waiting for their land allotments, some
40-plus years after Vietnam.
Right now, I don't have any commitments from anyone. I am
trying to get the Secretary to make good on her call to me that
there was going to be a process that was outlined clearly. I
have not received anything regarding that. I want a commitment
from you that these allotments are not going to continue to be
delayed and that you will provide me a status, like within the
next 24 hours, as to where we are with these PLOs because
people in Alaska are anxious, they are upset, they are mad, and
we are going to continue to channel that anger because what has
happened with this, basically, this re-look at these PLOs is
absolutely egregious.
Ms. Culver. Thank you, Senator.
I am aware of the PLOs and I can commit to you that we----
Senator Murkowski. Did you talk to BLM Alaska about this?
Ms. Culver. Yes. I have spoken with BLM Alaska.
Senator Murkowski. Ahead of the decision?
Ms. Culver. The decision was made, you know, with the
Secretary's office and was----
Senator Murkowski. So you did not talk to Chad Padgett
ahead of the decision?
Ms. Culver. I have spoken with Mr. Padgett repeatedly
during this process and as part of the decision and I can
commit to you that we feel we are on strong legal ground that
there will not be delays to the selections for the Vietnam Vet
era.
Senator Murkowski. Well, I would like you to tell me how
you are going to allow for their opportunity for selection with
continuing the PLOs in place because last I checked, that land
is not available to them or anybody else until these
withdrawals go forward.
Ms. Culver. I would be happy to provide you with additional
information in the next couple of days. We intend to, as the
Secretary said, to be very clear about a path forward here.
Senator Murkowski. Okay, well she said she was going to be
very clear. She was going to get to my folks within a day or
two and it has now been ten days and I have not heard word one.
And so, as far as I know, I am not sure where you are going to
get the authority unless you are going to pull it out of thin
air.
Thank you, Mr. Chairman.
The Chairman. Senator Barrasso.
Senator Barrasso. Thank you, Mr. Chair.
I would like to just follow up with some of the things that
Senator Murkowski is asking about because on February 12th,
BLM's Wyoming State Office postponed its March 2021 oil and gas
lease sale; and then on April 21st, the BLM Headquarters
notified the public that it was exercising its discretion not
to hold oil and gas lease sales into the second quarter of
2021, which would be April, May, and June. So has BLM postponed
or canceled the second quarter lease sales?
Ms. Culver. Yes, the second quarter lease sales are not
going forward.
Senator Barrasso. Okay, so you have canceled it.
Ms. Culver. Yes.
Senator Barrasso. All right. Will BLM reschedule these
lease sales, and when can we expect that to happen?
Ms. Culver. We have not made a decision yet regarding the
third quarter lease sales.
Senator Barrasso. So lease sales: first quarter, canceled;
second quarter, canceled. Correct?
Ms. Culver. Correct.
Senator Barrasso. All right.
On March 19th, Laura Daniel-Davis--and Senator, a number of
us have raised a letter that she has written in the past--wrote
a memo. The memo mentions the Department's 30 by 30 initiative,
a plan to conserve 30 percent of federal land by the year 2030.
Now, I am having trouble understanding why this memo would even
mention this 30 by 30 initiative. Is it the Department's
position that a staff memo can legally restrict or limit the
rights of existing oil and gas leaseholders?
Ms. Culver. All of the actions we take are subject to
valid, existing rights. I think the reason that 30 by 30 and
other issues have been mentioned is that the Interior
Department, and in particular, the BLM, manages these public
lands for all Americans under our Multiple-Use, Sustained-Yield
mandate. So we're looking at both the ongoing requests from the
oil and gas industry, our review of the program itself, input,
and other uses across public lands for recreation, to manage
for wildlife, to manage for conservation.
Senator Barrasso. Ms. Sgamma, would you like to add
anything to what you just heard?
Ms. Sgamma. Well, it's not a discretionary authority in the
Mineral Leasing Act, it's very clear: the Secretary shall lease
on a quarterly basis.
Senator Barrasso. And finally, Mr. Chairman, I know we have
a vote that is winding down and we need to get to the Floor.
Ms. Culver, on March 25th, Secretary Haaland hosted a
``virtual forum'' on the federal oil and gas leasing program.
The forum featured, really, a carefully selected set of
speakers, most of whom supported the Administration's ban on
oil and gas leasing. For example, the forum did not include
Governor Gordon, did not include Ms. Sgamma. We are told that
the Department will use the forum to then write a report that
will inform the Biden Administration's decisions on federal oil
and gas leasing, obviously putting a heavy thumb on the scale
by excluding some and including others who are favorable to
this. How does the virtual forum comply with the Administrative
Procedure Act and other laws?
Ms. Culver. The forum is part of an ongoing public process.
We haven't started a formal process, but we did invite a number
of representative individuals and organizations to speak at the
forum. We explicitly have exempted ongoing discussion with
Members of Congress, state and local elected officials, and
tribes, which is ongoing. Unfortunately, for the forum, we
could only have a few people and organizations from each
interest group. In particular, with the oil and gas industry,
we were actually really pleased to have so many companies offer
to participate in the forum, and we couldn't accommodate them
all, as you noticed. But since the forum, we have been holding
quite a few meetings with different trade groups and individual
companies and they have been continuing that conversation.
Senator Barrasso. I think you said you intentionally
exempted--I'm going to think you intentionally excluded--so I
am going to ask Kathleen and then the Governor to please
comment on what they might have thought about that.
Ms. Sgamma. Well, small independents definitely weren't
represented at that stakeholder meeting, but I do appreciate
that Ms. Culver is going to be meeting with us very shortly.
Senator Barrasso. Okay. Governor Gordon, any final
thoughts?
Mr. Gordon. Thank you, Mr. Ranking Member.
I think virtual forums are very difficult to get much
public input in and I appreciate the opportunity to have
further conversations, but I, Mr. Ranking Member, I think,
really, the challenge of having a limited audience really sets
the tone. And to your point, that tone then carries forward. So
I don't think it was a particularly good effort.
Senator Barrasso [presiding]. Thank you.
Senator Cantwell.
Senator Cantwell [presiding]. Thank you, Senator Barrasso,
thank you, and I think the Chairman has run to vote as you are
as well. And so I think it is me left here, so I will ask my
questions, and if anybody else shows up, I obviously will turn
to them.
Thank you for the hearing today, to both Senator Manchin
and Senator Barrasso. The issue of public land management and
public policy on this is near and dear to my heart for a lot of
reasons, but obviously because I love the outdoors and love the
outdoor economy. But I also think it is critically important
that we get a fair return to taxpayers. Taxpayers deserve to
look at our federal lands and the leasing of those federal
lands and get a federal return. The Federal Land Policy
Management Act requires the Federal Government to ``consider
the long-term needs of future generations.''
So given the looming climate crisis and hundreds of
billions of dollars in climate damage we are starting to
accumulate each year, I think we need to face the fact that our
public lands have an impact on all of this. And indeed, we need
to get a fair return to the taxpayers. A 2018 USGS study found
that the life cycle emissions from oil, gas, and coal pulled
from the public lands and waters were equivalent to 20 percent
of the total U.S. greenhouse gas emissions, and at the same
time, a recent study from the National Academy of Sciences
estimates the U.S. can store up to 500 million metric tons of
CO2 per year through a mix of carbon-enhancing
practices on crop land, grassland, and forest. I appreciate the
fact that we are having this hearing on the complexity of this
issue, but as I said, I care a lot about the outdoor economy
and I care a lot about this issue.
Ms. Culver, do you believe that the current royalty rate
takes into consideration the full environmental cost posed on
Americans from oil and gas development, and do you believe the
12.5 royalty rate adequately provides the taxpayers a fair
return for development on mineral lands?
Ms. Culver. The royalty rate was set over a century ago now
and, certainly, we have a lot more information we can take into
account. The General Accounting Office has repeatedly
identified this as an issue for the BLM to address and that we
could be giving taxpayers a more fair return if we looked at
that.
Senator Cantwell. Well, thank you. I think, according to
GAO, as many as 99 percent of the bonds for wells currently
operating on federal lands are insufficient. We know from our
own GAO that BLM just got $204 million in Reclamation bonds,
but the cost to reclaim over 96,000 producible oil and gas
wells on public land could exceed $6 billion. So this number
fails to account for the cost to clean up an unknown number of
abandoned wells scattered across federal land. We know this in
our state. We paid attention to a variety of these issues on
abandoned wells that emit methane and the cost and the backlog
of existing need is known.
Ms. Sgamma, a recent poll showed that 73 percent of the
people in the West believe that industry should fully remediate
sites when drilling is complete. Do you believe that taxpayers
and industry should be responsible for the cost of cleaning up
those oil and gas wells?
Ms. Sgamma. Well, under the current system, companies are
responsible for cleaning up and reclaiming their well sites. So
the number of--IOGCC, the Interstate Oil and Gas Compact
Commission, estimates that about 56,000 wells are currently
abandoned, and that is a result of many wells that were
abandoned before regulatory systems came into play, such as in
Wyoming, which has been the law of the land for decades now. So
there is definitely an ongoing problem of those pre-regulatory
wells. But as far as current systems for ensuring that wells
are not abandoned and that they are reclaimed, well, companies
are already held liable for that and the bonding is an
assurance and when a company does go bankrupt or another
company acquires their assets, that acquiring company is
responsible for any of those wells as well.
So the current system and the current processes in place
ensure that we don't abandon wells and orphan them today and
that, in that rare example, that companies are held liable.
Senator Cantwell. Yes, you are reminding me of these
assurance laws. We have worked on them in the past. Trust me, I
do not think they are sufficient, clearly, on the land side,
and should be, to holding people accountable.
Ms. Culver, what steps do you think BLM has taken to hold
people accountable on the Abandoned Mine Land Program, and what
else do we need to do in this area to make sure that we
certainly have assurances for companies that go out of
business?
Ms. Culver. The BLM, as you noted, has standard bonding
rates, which the General Accounting Office has repeatedly
acknowledged do not cover the cost of reclamation and we have
learned over the years that when a mining company or an oil and
gas company goes into bankruptcy, the funds needed for the
cleanup of our public lands do not tend to get primacy. So it
is certainly something we're looking at in our ongoing review.
Senator Cantwell. Yes, I have been involved in two of these
cases in the Northwest and, basically, had to make sure that we
got the Federal Government to help intervene, otherwise the
community would have been left with the refuse and the
pollution and no resolution to the issue. And so these issues
of the ability to get out through bankruptcy or acquisition,
you know, we should not have to go to DOJ and to agencies to
mandate that the cleanup happens or that the city and taxpayers
are not left on the hook.
So anyway, well, thank you so much. I may submit some more
questions for the record.
I thank all of our witnesses for being here today and for
your testimony. I hope that we can get more out of our public
lands and protect them at the same time because the stewardship
of our public lands, from a revenue perspective, I think, is
very important to American taxpayers.
So with that, I thank the witnesses. Members will have
until close of business tomorrow to submit additional questions
for the record.
The Committee stands adjourned.
[Whereupon, at 12:10 p.m., the Committee was adjourned.]
APPENDIX MATERIAL SUBMITTED
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