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Onshore Oil & Gas

The Federal Land Policy and Management Act of 1976 and the Mineral Leasing Act of 1920 grant BLM the authority to manage federal lands, including leasing certain lands for oil and gas development. The Oil and Gas Management Program includes over 63,000 onshore oil and gas wells on federal lands.

Managed and regulated by the Bureau of Land Management (BLM).

The Office of Natural Resources Revenue (ONRR) manages some monetary transactions.

Did you know?

Exploration for oil and gas changed significantly in the early 2000s, with new applications of extraction methods, known as horizontal drilling and hydraulic fracturing, commonly called “fracking.” These methods made extracting oil and gas deep below the surface of the earth in shale rock formations profitable.

Hydraulic fracturing pumps water, sand, and chemicals into the earth to fracture the shale rock so that natural gas and oil can flow through the well to the surface. Major oil and gas shale rock formations in the U.S. include the Permian, Haynesville, and Eagle Ford Regions mostly in Texas; the Marcellus Region in West Virginia, Pennsylvania, and New York; the Niobrara Region in Wyoming and Colorado; and the Bakken Region in North Dakota and Montana.

  • 1

    Plan

    BLM field offices prepare comprehensive Resource Management Plans (RMPs) to guide leasing decisions on federal lands, including which lands are open to oil and gas leasing, and which lands are closed. Currently 8% of all oil and 11% of all natural gas on federal lands are available for extraction through leasing. BLM field offices develop RMPs in line with multiple-use and sustained-yield principles, and by engaging the public and various levels of government.

  • 2

    Lease

    BLM field offices award leases for oil and gas resources on lands designated within RPMs during frequent (often quarterly) live lease auctions open to the public. Before the live auction, the BLM field office estimates the fair market value for the natural resources in question.

    During the live auction, bidders compete for a lease by placing bids. The BLM field office awards the lease to the highest bidder, so long as the bid is equal to or greater than the fair market value estimate. Once the BLM field office accepts a bid, the bidder must pay the bonus as well as the first year’s rent to BLM to secure the lease.

  • 3

    Explore

    The lease holder must file an Application for Permit to Drill (APD) with the BLM field office in order to explore the leased land for oil and gas deposits. To apply for an APD, lease holders must submit an Exploration Plan that includes information about the well and associated rights of way, roads, pipelines, and production facilities. After the APD is filed, there is a mandatory 30-day public notification period before the permit can be approved.

    While reviewing the APD, BLM analyzes the impact of drilling on the environment using an Environmental Impact Statement or an Environmental Assessment in accordance with the National Environmental Policy Act. BLM must also ensure that conditions for the National Historic Preservation Act and the Endangered Species Act are met before awarding the permit.

    Once granted, the APD expires within two years. During the explore phase, companies pay rent to ONRR.

  • 4

    Develop

    The APD is one of many permits a lease holder must obtain to move from exploration to development and production. Once operators and lease holders obtain all needed permits and licenses, companies build their operations and extract oil and gas from federal lands.

    During development and production, the BLM field office performs a number of inspections to enforce lease terms and monitor health, safety, and environmental concerns. Once operators successfully extract oil or gas in paying quantities, the lease holder stops paying rent and starts paying royalties to ONRR.

  • 5

    Decommission and reclaim

    Even before the close of an oil and gas operation, operators and lease holders must begin reclamation. At the start of an operation, the operator includes a Reclamation Plan in the Surface Use Plan that must be approved by BLM before construction can start.

    The lease holder also posts a bond of at least $10,000 that BLM holds during the operation to enforce lease terms and reclamation. The operator must conduct interim reclamation throughout the life of the operation, concluding with appropriately plugging wells and restoring the ecosystem.

    The BLM field office performs inspections throughout the operation to ensure that interim reclamation takes place, wells are appropriately plugged, and the ecosystem returns.

  • Learn more

Revenue collected by BLM and ONRR

Bonus

The amount the highest bidder paid for a natural resource lease.

Rent

$1.50 per acre for five years
$2.00 per acre thereafter

Royalty

12.5%

Get involved

Participate in the onshore oil and gas leasing process.

Join a Resource Advisory Council. BLM formed 29 Resource Advisory Councils in the western U.S. to provide advice on managing public lands and resources. Each council consists of 12 to 15 members with diverse interests in local communities, such as ranchers, environmental groups, tribes, state and local government officials, academics, and other public land users. Join your local Research Advisory Council.

Volunteer. Find opportunities in your area or create a BLM partnership.

Contact a local BLM office. BLM has 12 state and regional field offices, mostly in the western U.S. Find your state office for details about land-use policies in your area.

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