A field with oil wells in Musselshell County, Montana (Photo by Darrell Ehrlick of the Daily Montanan).
For the first time in more than 60 years, the Bureau of Land Management has written new rules to oversee oil and gas development on public lands. These common-sense rules provide needed changes to protect taxpayers, protect clean air and water, and protect public health. Oil and gas companies will finally be required to post responsible bonding levels that ensure funds are available to reclaim abandoned well sites if companies skip town before cleaning up their messes. As you can imagine, oil and gas lobbyists are not happy with these changes and are doing their best to stop their implementation.
It is vital that we prevent that from happening.
These rules will protect our 245 million acres of public lands, something Montanans care deeply about. The University of Montana’s biannual voter survey released last month shows that 70% of Montanans support BLM policies that give conservation of public lands equal consideration as extractive uses like oil and gas drilling. So, let’s examine exactly how these updated bonding levels align with Montanans’ strong conservation values while also protecting taxpayers.
As most of us know, oil and gas companies are required to post a financial bond before developing a new well. At the end of a well’s productive life, the owner is required to plug it and reclaim the land used. However, if the owner is negligent in this regard, their posted bond will be forfeited and those funds will be used to properly plug the well and reclaim the land. Here is the problem: The BLM estimates that plugging and reclaiming the land of a single well today can cost as much as $100,000. The old bonding amount for a single well was $10,000. Who pays the reclamation costs that go well beyond the amount bonded if the owner of the well walks away? The American taxpayer. And, if taxpayers don’t foot the bill, we are left with degraded public lands, environmental hazards, and risks to public health.
So, it’s no wonder so many well owners choose to walk away from sites no longer producing – it is much cheaper to do so. Considering inflation, that $10,000 bond amount implemented more than 60 years ago would be valued at more than $100,000 today. And that $100,000 figure is exactly what BLM set as new bonding requirements for a single well. This isn’t rocket science. These rules simply reflect today’s costs and put the responsibility for cleanup squarely where it belongs — on the oil and gas industry.
Oil and gas companies claim that only a few orphaned wells sit on public lands, so we do not need these new protections. In truth, thousands of idle wells sit on public lands likely to become orphaned as they have been idle for many years. Developers of those wells will likely walk away from them because, as noted earlier, it is just more economical for them to forfeit their bonds. Also of importance, these “idle” wells often contribute to environmental degradation, emit dangerous methane pollution, pose safety hazards, and adversely affect surface waters. Again, the new rules requiring responsible bonding amounts will incentivize oil and gas companies to clean up our public lands after extraction.
Finally, let’s review how these rule updates affect leasing. During the last decade or so, the BLM offered more than 40 million acres for competitive lease sales. Of that amount, about 10 million were actually leased—most by oil and gas companies. Of this amount, only about 7% generated oil and gas royalty revenue to the government. The new rules, in addition to increasing the royalty rate paid to our treasury, will place conservation of public lands on equal footing with extractive industries in the bidding process, a policy aligned with the values of a vast majority of Montanans.
These new rules are long overdue and reflect the true mission of the BLM to protect and effectively manage our public lands.
Edward Barta is a Billings resident, retired teacher, landscape photographer, avid fisherman, and chair of Northern Plains Resource Council, a grassroots conservation and family agriculture group.
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