Oil and Gas Drilling In Utah Has Returned to Pre-Pandemic Levels. But Producers Still Worry About Leasing Ban.
Energy companies sounded the alarm when President Joe Biden indefinitely paused oil and gas leasing on federal public land in January. They projected billions of dollars of losses in just the first year.
But drilling in Utah has already returned to pre-pandemic levels according to data from the state’s Division of Oil, Gas and Mining. That’s not a surprise, according to Landon Newell with the conservation group Southern Utah Wilderness Alliance, since the price of crude oil is also back up to where it was at the end of 2019.
“It’s just simple economics,” Newell said. “When the price of oil or natural gas is high, the drilling follows that.”
He said the price of crude oil has a much bigger impact on oil production on public lands than federal policies like the president’s leasing ban. And since energy producers have millions of acres under lease already in Utah already, it’s unlikely the leasing ban will cause a slowdown in oil production any time soon.
Drilling in Utah has recovered as the price of crude oil has increased, following a crash last spring. Drill rigs can drill multiple wells each month. | Source: State of Utah Division of Oil, Gas and Mining | Credit: Kate Groetzinger & Chelsea Naughton
Kathleen Sgamma is with the Western Energy Alliance, an energy lobbying group, and she partially agrees with that theory. She said it’s still too early to tell what effect the ban could have in Utah.
“It's good to see the numbers are recovering, but I wouldn’t anticipate we’d see the effects of the Biden ban until later this year,” she added.
Sgamma said the permitting process takes about a year or two on federal land, so the wells being drilled now were probably in the works long before the ban started.
But she said producers could be impacted by the ban long before they run out of land to develop, because oil basins in the West are often a patchwork of private, state and federal land. That means a company drilling a horizontal well on state or private land could end up hitting a pocket of oil or gas on federal land, but if they can’t get that lease, they have to wait to drill.
“We’re going to start to see those effects later, but they come pretty quick,” she said.
As proof, she cited a study from the University of Wyoming that found there could be around $40 million of lost oil revenue in Utah if the ban continues through the end of 2021. The study was funded by the oil and gas industry.
The Biden administration has not said when the pause on leasing will end. It is currently reviewing the federal oil and gas leasing process and is planning to release an interim report this summer.