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1 1 (March 10, 2021)

handle is hein.crs/govecoj0001 and id is 1 raw text is: ®I nring the eiltv deat inc 11 S March 10, 2021 Potential State Impacts of a Pause on Federal Onshore Oil and Natural Gas Leases On January 27, 2021, President Biden signed Executive Order (E.O.) 14008, Tackling the Climate Crisis at Home and Abroad. Among other actions, this E.O. instructs the Secretary of the Interior (SOI) to pause new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices. This E.O. was preceded by Secretarial Order (S.O.) 3395, issued by the Department of the Interior on January 20, 2021. The S.O. suspends certain delegated authorities to bureaus and offices for 60 days, including the authority to issue an authorization, including a lease, amendment to a lease, affirmative extension of a lease, contract, or other agreement, or permit to drill; the authority to authorize such actions is retained in a number of indicated positions. The federal onshore mineral estate is approximately 710 million acres; much of this is open to mineral development, pursuant to various laws and authorities. Development of these resources contributes to total U.S. energy production: in 2019, approximately 6.1% of crude oil and 9.6% of natural gas production (percent of total U.S. production) came from onshore federal lands. The SOI is authorized by the Federal Land Policy and Management Act (FLPMA), codified at 43 U.S.C. §§1701 et seq., to identify suitable uses of public lands, including if lands are suitable for mineral development. The Mineral Leasing Act of 1920 (MLA), codified at 30 U.S.C. §§181 et seq., requires onshore oil and natural gas lease sales to occur quarterly if suitable parcels are available. Various interested parties have raised questions regarding the impacts of the EO's leasing pause, including questions of the severity of impacts on oil and natural gas production and state revenues from federal leases. Reviewing information related to federal onshore leases may assist in the discussion of the potential impacts of the leasing pause. Potential Imp acts of the Leasing Pause on Oil and Natura Gas Production The leasing pause could affect a number of states with varied intensity. In 2019, 24 states produced some oil from federal onshore leases and 27 states produced some natural gas from federal onshore leases. Although bringing any lease (federal or nonfederal) into production depends on many factors unrelated to the leasing pause, this discussion focuses on how a temporal gap in new leases could affect production over time. Some data suggest that the potential impacts of the pause on new leasing would not occur for years, as the completion of new wells on existing leases could continue to bring new production to market. The Bureau of Land Management (BLM) indicates that over 14,000 leases are not in producing status: out of 38,294 oil and gas leases, 24,127 were in producing status in FY2019. Bringing a federal lease into production can take years, and full production from each lease typically requires multiple wells. BLM indicates that 1,260 wells were completed in FY2019. Some might assert that the non-producing leases represent resources that are not presently economical to develop, and that new federal leases (in areas with expected favorable economics) are necessary to avoid declines in production. Typical oil and natural gas wells under existing leases are drilled into shale formations and are completed using hydraulic fracturing. Such wells experience high initial levels of production, which decline rapidly over the first few years. If no new leases are signed and if relatively fewer new wells are completed on existing leases, production declines could result from the geophysical characteristics of hydraulically fractured wells. Variation in Production for Selected States Reviewing production contributions from some states with federal leases can inform an understanding of potential impacts to these and other states. In the two figures below, the five states shown for each commodity were the top producers of that commodity from federal leases in 2019 and the nine previous years. Figure 1 and Figure 2 depict the top producing states' production from federal leases as a percent of that state's total production for oil and natural gas, from 2010 to 2019. The data generally indicate slow moving trends that are somewhat flat to negative; the ranking among these states changes little over the 10 years shown in both figures. Figure I. State's Oil Production from Federal Leases as a Percent of State's Total Oil Production 7 -- 40 30 20 fuI 21 01 20W 2014 ? ¢1% 201 QI 2O 2019 Source: CRS calculations using data from the Office of Natural Resources Revenue (ONRR) and the Energy Information Administration (EIA). ittps://Crsreports.congress.gt

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