close
Utah economy

Utah’s oil and gas industry is as busy today as it was during Trump’s “energy domination” days

There were only three drilling rigs in Utah’s oil and gas fields last January when new President Joe Biden suspended new leases on public lands while his administration revised the federal program of oil and gas.

Today, 10 platforms are digging new wells in the Uinta Basin, according to energy consultant Baker Hughes. Meanwhile, the industry has inundated agencies with drilling proposals in Utah, filing more applications in the past six months than in any six-month period under the favorable rule of the United States. Donald Trump’s industry as president, according to state data.

As state and industry leaders predict a disaster for energy development and rural employment from the Biden moratorium, which they call a development “ban”, the exact opposite seems to be happening. Utah’s oil and gas sector is waking up from its pandemic-induced slumber despite hurdles put in place by the climate-friendly Biden administration.

So what is going on? The price of oil has exceeded $ 70 a barrel. Energy companies are moving quickly to increase production as prices remain high, the Utah Oil, Gas and Mining Division said.

The boom is proof that financial incentives are driving energy development in Western public land states, not White House decrees, according to Landon Newell, a lawyer with the Southern Utah Wilderness Alliance.

“Utah said the sky was going to fall [because of Biden’s lease moratorium], but that was directly contradicted by the facts and reality, ”Newell said. “They’re drilling like mad in the basin where the governor’s office said things would stand still.”

Critics of the Biden administration have repeatedly characterized the moratorium as over-federal in scope and predicted dire consequences for the rural West. An industry-backed study from the University of Wyoming, for example, said a development ban on federal land would blow a $ 15 billion hole in Utah’s economy over 20 years.

Utah Gov. Spencer Cox’s office said in May that the lease moratorium “would end potential future exploration and investment.”

While welcoming the upsurge in drilling, Cox maintains his previous position, according to Thom Carter, director of the governor’s office for energy development.

“The economic impact of all of this can be significant and we are concerned that the decisions will be felt nationwide and have a disproportionate effect on rural Utah,” Carter said. “While your report regarding a rebound in the pandemic is excellent, there are still real economic issues surrounding oil right now, including the cost at the pump which is at times declining.”

So far this year, Utah drillers have started 144 wells, state data shows. That’s almost that much at 154 for the whole of 2019, the year before the pandemic, and puts the year on track to beat 2018 and 2017, when 204 and 199 wells, respectively, were drilled.

Rikki Hrenko-Browning, president of the Utah Petroleum Association, attributed the rebound to a combination of factors, such as leases entered into during the previous administration, with a large number of claims submitted anticipating the Biden administration to fail. would support no new federal drilling, and a move to tribal lands.

“There is a long delay between rental, authorization and actual drilling, and it will take time for the full effects of the federal rental policy to be felt,” she said in an e- mail. “However, right now our state is lacking key revenues from lease sales that should have taken place this year and jobs are at risk if the illegal rental ban continues.”

Critics in the industry, however, argue that Utah’s oil and gas recovery tells a different story. They say it reinforces arguments made in internal memos prepared by Utah state agencies and a new report claiming the Biden lease moratorium will not slow energy development in the short term.

This is because so much public land in Western states has been leased for oil and gas development by the Trump administration. The glut of undeveloped federal leases in Utah would support drilling for the next 60 to 90 years at recent activity levels, according to a report released Wednesday by the Conservation Economics Institute, an Idaho-based think tank.

“We think these western states have their economies completely tied to this industry,” said Anne Hawke of the Natural Resources Defense Council, or NRDC. “But in fact, there is so much more going on economically in these states in terms of information services and jobs.”

The report was commissioned by SUWA, NRDC and several other conservation nonprofits that strongly support lease reform. He examines federal leases in Utah and four other Western power-producing states: New Mexico, Montana, Colorado, and Wyoming.

The groups released it on Wednesday ahead of the expected White House announcement of proposed reforms to the federal rental program overseen by the Bureau of Land Management.

“When the industry panicked after the Biden moratorium, this report provides a reason,” Hawke said. “It’s a long game and it’s not like we’re going to finish tomorrow. Jobs are not affected as they say. It highlights all the reasons why stepping back and taking a break are truly rational gestures. We all know the system is down. We need to look at the royalties.

There is also evidence that speculation is rampant in the federal rental program, particularly in Utah, where thousands of acres of leases are awarded to people with no known ability to actually develop them.

In his first day in office, Biden halted new leases while the Home Office conducted a comprehensive review, which he recently submitted to the White House. The moratorium only blocked new leases; it did not apply to drilling or production from existing leases.

A federal judge has since overturned the moratorium on leases, but the BLM has yet to resume offering new leases in Utah, although some have been issued in other states.

While environmentalists hope Biden’s reforms will limit federal leases, especially in environmentally sensitive or scenic locations, Utah officials want the industry to retain access to public energy resources in the West.

“We’re not interested in actions that pit rural and urban Utahns or rural and urban Americans against each other, and that’s what the president talked about when he was inaugurated, that’s what the governor Cox believes wholeheartedly, ”Carter said. “We want market-based decisions. We don’t want government decisions, so if the market determines some of the [the drilling surge], It’s awesome.”

Yet at the end of the day, federal lands are not at the heart of Utah’s oil and gas production, even though Utah is a key public land state. Of the 1,654 wells currently proposed for Utah, according to Carter, 58% are on non-federal land – that is, tribal, state or private land.

A review of past drilling and production shows that only a third of this activity in Utah has occurred on federal land. Yet a lot of federal land has been leased. According to BLM statistics, less than half of Utah’s 3 million acres under lease are in production.

In other words, unused oil and gas leases occupy 1.7 million federal acres in Utah, some of which are in sight of national parks and monuments. There is little the Biden administration can do to stop the industry from drilling most of this land.

Mary Cashion

The author Mary Cashion