A new report from the Bureau of Land Management shows that about half of federal drilling leases did not turn out oil or gas in 2015. Chris Saeger, Director of the Western Values Project said that the decline in market oil prices is the driving force behind the decrease in production. He said that lawmakers should begin to prepare for the effects of smaller lease revenues.
“It’s inevitably going to have an effect just like less economic activity in any sector would have on a state budget,” Saeger said. “I think what’s important is two things and these are at minimum two recommendations we would make for state policymakers and federal policy makers: to plan for the long term, first of all; and second of all, to make sure that a fair share is being charged for the royalties that are extracted on that land in good times or bad.”
A diverse investment portfolio of sorts could be the right response to the changing oil and gas market. Saeger said that states like Utah should recognize the importance of other industries dependent on public lands.
“What’s really important is—not only from the point of view of the overall state budget planning but also from the point of view of public lands management—to recognize that there is an economic value as well when it comes to places where this activity doesn’t happen,” he said. “There is an outdoor recreation economy from outfitters to folks involved with the hunting and fishing industry, the outdoor gear industry, that all depend on these lands in order to prosper.”
The number of leases issued in the states of Utah, Colorado, New Mexico, and Wyoming have declined by about half over the last decade.
