Big U.S. Oil Drillers Have Federal Permits to Last Years

(Reuters) — U.S. President Joe Biden's promised ban on new oil and gas drilling on federal lands would take years to shut off production from top shale drillers because they already have stockpiled permits, according to Reuters interviews with executives.

But smaller independent oil drillers without the resources of big corporations were more worried about Biden's vow to toughen regulations and stop issuing new permits on federal lands, part of his sweeping plan to combat climate change and bring the economy to net zero emissions by 2050.

Federal lands are the source of about 10% of U.S. oil and gas supply. Fossil fuels produced on federally managed lands and waters contribute nearly 25% of U.S. greenhouse gas emissions, according to government estimates, making them an easy target for the administration's climate agenda.

Biden's pledge would reverse former President Donald Trump's efforts to maximize drilling and mining on federal property. In an order dated Wednesday, the Biden administration suspended oil and gas leasing and permitting on federal lands for 60 days while it reviews the legal and policy implications of the mineral leasing program. But a freeze or ban will not end production in those areas overnight.

The seven companies that control half the federal supply onshore in the Lower 48 states have leases and permits in hand that could last years.

"We have always been very confident that we will continue to develop and drill on federal acreage," said David Hager, executive chairman of Devon Energy Corp, the biggest oil producer on onshore federal land in the Lower 48 states. "It's embedded into the rights we have in the leases and we're doing it the right way."

He said he expected the company's federal lands permits would last at least four years.

Other top producers on federal land include EOG Resources Inc, ExxonMobil Corp, Occidental Petroleum Corp, ConocoPhillips, and Mewbourne Oil Company.

Representatives at these companies did not comment for this article. But several have issued public statements saying they have solid stockpiles of federal permits and an ability to meet tougher emissions regulations expected under Biden. They have also said they can quickly shift drilling to state or private acreage once federal permits dry up.

EOG has said it has at least four years of federal permits. "When it comes to access to federal lands, that's one of the things we're not really worried about in our business. We have a lot of potential outside of federal land, too," Chief Operating Officer Billy Helms said during an investor conference last year.

Occidental said last year it had well over 200 federal drilling permits in hand and had requested another roughly 200 permits on New Mexico acreage, where some of the richest reserves lie beneath federally owned property.

Ameredev II, which produces about 10,000 barrels of oil per day in New Mexico's Permian, also has federal drilling permits to last at least four years. 

"We're trying to maximize our value against an uncertain range of possibilities," said CEO Parker Reese.

Energy consultancy Rystad said it saw stockpiling of federal lands drilling permits in the run-up to the November presidential election, with federal permit requests rising to a 31% share of all permit requests in the major U.S. oilfields from 18% in 2019.

Biden's team did not respond to several requests for comment.


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