US picks up pace of drilling permit approvals

  • Market: Crude oil, Natural gas
  • 03/11/21

President Joe Biden's administration has started approving hundreds of requests to drill on federal land, after a first month where the pace of federal permitting plunged 98pc from the same period last year.

The US Interior Department's Bureau of Land Management (BLM) has approved 200 drilling permits over the past two weeks, compared to the just 16 drilling permits approved during the first full month of the new administration. The surge in activity brings the number of approved drilling permits to 229 since Biden took office, of which more than 70pc went to operators in Wyoming and 24pc went to operators in North Dakota.

The quickened pace of drilling permitting comes as the US Senate prepares to vote early next week on whether to confirm US representative Deb Haaland (D-New Mexico) as the next US interior secretary. The Interior Department, when asked for comment, said it has continued to process permits to drill on federal land in a timely manner.

"The review process for an application for a permit to drill is comprehensive to ensure oil and gas development will be done in an environmentally sound and responsible manner," the agency said.

The approval of oil and gas permits slowed to a trickle after Biden took office on 20 January, when the acting US interior secretary imposed a high-level review of permits for at least 60 days. But the number of permit approvals has picked up as the administration today reaches its 50th full day in office.

Oil and gas industry officials say the pace of permitting is still well below what is typical. BLM over the same 50-day stretch in 2020 issued more than 1,200 drilling permits, although at that time there was more drilling activity because Covid-19 restrictions were not widely in place and crude prices did not begin their steep dive due to Opec+ production disputes until late February.

"It is encouraging that the Interior Department has started to approve permits, but it is still way below demand and normal levels," Western Energy Alliance president Kathleen Sgamma said.

Sgamma said she would be "surprised" if the Interior Department extends the high-level oil and gas permitting review past its scheduled expiration on 21 March, given what she says is a lack of legal authority for restricting permitting.

Oil and gas producers have protested the slowdown in drilling permits under Biden, along with uneven treatment of minor "sundries" permits, in the weeks after Biden took office. The industry says limiting permitting could lead producers to shift investments to private lands or overseas, depriving states of royalties and making the US more reliant on imports.

Lawsuit over delays withdrawn

US independent Continental Resources last month filed a lawsuit that accused the Biden administration of unlawfully delaying 50 drilling permits in North Dakota, which the company said could jeopardize its ability to build well pads before a 10 June deadline needed to avoid disturbing endangered species. But the company voluntarily withdrew the lawsuit this week after the permits were approved from 25 February and 9 March.

The more rigorous review of drilling permits is distinct from a "pause" that Biden imposed on new federal oil and gas leasing that remains in effect. That pause is unlikely to have any effect on US oil and gas production until 2022 because of the "minimum eight-to-ten month delay" from leasing to production for onshore areas, the US Energy Information Administration said this week. The agency expects the pause will reduce crude production by less than 100,000 b/d next year.

The Interior Department this week said it would release an interim report outlining its "next steps" on oil and gas development by early summer. The administration has said it will pause leasing until it finishes a comprehensive review of the entire oil and gas permitting program, which might include changes to royalty and permitting policies.

Drilling permit approvals

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