that will help us ensure that oil and gas sites are properly
managed and reclaimed and that taxpayers aren’t left picking up the tab,” said BLM Director Neil Kornze.
The ANPR also seeks comments on how BLM might update its rules regarding the minimum acceptable bid that
must be paid by parties seeking a lease at auction, and the
annual rental payments that are due once a lease is obtained.
DOI said the current minimum acceptable auction bid
is $2/acre, well below the rate at which most parcels sell,
which suggests that the rate could be higher.
After obtaining a lease, a lessee now is required to make
annual rental payments until the lease starts producing oil
or gas. These rental rates currently are $1.50/acre for the first
5 years and $2/acre for years 5 through 10.
Study: North Texas quakes
likely linked to gas drilling
Special Projects Editor
A seismology team in a study led by Southern Methodist
University found high volumes of wastewater injection combined with brine extraction from natural gas wells was “the
most likely” cause of earthquakes near Azle, Tex., during
In an area where the seismology team identified two intersecting faults, they developed a 3D model to assess the
changing fluid pressure within a rock formation in the affected area. They used the model to estimate stress changes
induced in the area by two wastewater injection wells and
more than 70 gas wells.
“The model shows that a pressure differential develops
along one of the faults as a combined result of high fluid
injection rates to the west and high water removal rates to
the east,” said Matthew Hornbach, SMU associate professor
“When we ran the model over a 10-year period through
a wide range of parameters, it predicted pressure changes
significant enough to trigger earthquakes on faults that are
Heather DeShon, SMU associate professor of geophysics,
said induced seismicity–earthquakes caused by something
other than strictly natural forces–is often associated with
subsurface pressure changes.
“We can rule out stress changes induced by local water
table changes,” DeShon said. “While some uncertainties re-
main, it is unlikely that natural increases to tectonic stresses
led to these events.”
While the SMU Azle study added to evidence connecting
some injection wells and, to a lesser extent, some oil and
gas production to induced earthquakes, SMU’s team noted
But American Petroleum Institute and Independent Petroleum Association of America officials quickly questioned
whether federal onshore oil and gas rate increases are justified or necessary.
“Despite the renaissance on state and private lands, energy production on federal lands has fallen, and yet another
set of costly changes to federal rules could drive more economic development and job creation off public lands,” API
Upstream Group Director Erik Milito said.
He said, “Clear, consistent leasing and royalty terms are
part of what makes investments possible, so preserving cer-
tainty in the process is critical for the consumers and work-
ers that benefit from domestic production.”
At a time when crude oil prices have dropped 50% over
the past 7 months, and coupled with new federal regulations
for onshore producers, the Obama administration’s proposal
to increase onshore royalty rates would ultimately result in
fewer American jobs, reduce energy production, and hurt the
country’s energy security, warned Daniel T. Naatz, IPAA’s
vice-president of federal resources and political affairs.
“Simply put, raising fees on America’s independent producers—companies with an average of just 12 employees—
will cause small, family-owned businesses to suffer and further discourage energy development on federal lands owned
by US taxpayers,” he said.
DOI said the royalty rate for competitive oil and gas leases on
federal lands is 12.5% of the value of production. The current regulation locks that rate at the minimum allowed by
law, even though many states and private landowners assess
higher rates to oil and gas developed on their lands.
The ANPR seeks comments on potential changes that
would provide the BLM with the procedural flexibility to
change the royalty rate in response to market conditions
consistent with the procedure for offshore oil and gas leases.
The ANPR notice also seeks comments on whether existing bonding requirements and civil penalties are adequate.
The current minimum bond amounts—$10,000 for
a lease-wide bond, $25,000 for a statewide bond, and
$150,000 for a nationwide bond—have not been updated in
two generations, DOI said. The current lease-wide amount
reflects a small fraction—one fifth of one percent—of the
average cost of drilling a modern well and may not adequately reflect the potential cost to taxpayers should a company
fail to comply with lease terms, it said.
Existing rules that cap civil penalties that BLM can assess
may be at levels too low to sufficiently deter potential violations, DOI said.
“Today’s bonding rates were set when Dwight D. Eisenhower
was president. We are long overdue to consider an update