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Oil, conservation groups react to proposed industry rule changes

The rule among other things sets a limit on monthly methane volumes on federal and tribal lands
Mario Tama
Getty Images
The rule among other things sets a limit on monthly methane volumes on federal and tribal lands

The U.S. Bureau of Land Management recently published a draft rule that intends to cut down on a potent greenhouse gas produced from oil and gas production.

Some oil industry groups in Montana and Wyoming say the rule is too restrictive, while environmental groups say it’s not restrictive enough.

The rule among other things sets a limit on monthly methane volumes on federal and tribal lands, and applies royalties when operators exceed it.

Western Environmental Law Center attorney Melissa Hornbein is part of a coalition of conservation groups that say they’re disappointed in the proposed rule. She says she and others in the coalition want to see the BLM go further.

“We believe pretty strongly that BLM has both the legal authority and a responsibility to go beyond a royalties-based approach to limiting venting and flaring, and they’ve really stuck pretty closely to that royalty-based approach here, with a few additional things kind of around the edges," Hornbein said.

The rule has been caught in litigation since the BLM introduced it in 2016, when oil industry groups and states including Montana and Wyoming challenged it in Federal court.

The Wyoming Petroleum Association in a statement says the requirements as drafted create regulatory uncertainty and investment risks for exploration and production companies.

The comment period ends Jan. 30.

Environmental and oil industry groups in Montana are also lukewarm in their reaction to the Biden administration’s revised oil and gas leasing program, which in November received additional guidance meant for local state offices.

The guidance clarifies the leasing program under the Inflation Reduction Act, which calls for an increase to decades-old royalty and rental rates.

Alan Olson with the Montana Petroleum Association says the roughly 4% bump in royalties pushes federal rates up to what the state charges for leases.

“So, that’s not all that big of a deal,” Olson said. “But, at the same time, it raises the cost of doing business, the lease rates are going up, the bonus payments are going up, the annual payments are going up, but it is already extremely expensive to develop minerals on a federal mineral estate.”

Montana’s active oil production is small.

Environmental groups like WildEarth Guardians and the Western Environmental Law Center say although they’re disappointed that oil and gas leasing will continue at all, they welcome other changes to the program. That includes an end to noncompetitive leasing, which allows companies and individuals to buy up low-value land to sell or to boost their portfolios.

Kayla writes about energy policy, the oil and gas industry and new electricity developments.