Oil and gas companies must pay more to drill on federal lands under new Biden administration rule

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WASHINGTON (AP) — Oil and gas companies will have to pay more to drill on federal lands and satisfy stronger requirements to clean up old or abandoned wells under a final rule issued Friday by the Biden administration.

WASHINGTON — Oil and gas companies will have to pay more to drill on federal lands and satisfy stronger requirements to clean up old or abandoned wells under a final rule issued Friday by the Biden administration.

The rule also will increase the minimum leasing bond paid by energy companies to $150,000, compared with the previous $10,000 established more than 60 years ago. The higher bonding requirement is intended to ensure that energy companies meet their obligations to clean up drilling sites after they are finished drilling or cap wells that are abandoned.

Along with efforts to clean up so-called orphaned, or abandoned, wells,"these reforms will help safeguard the health of our public lands and nearby communities for generations to come,” Haaland said. The rule also will ease pressure to develop areas that contain sensitive wildlife habitat, cultural resources or recreation sites, she said.

“As energy demand continues to grow, oil and natural gas development on federal lands will be foundational for maintaining energy security, powering our economy and supporting state and local conservation efforts," API vice president Holly Hopkins said in a statement. “Overly burdensome land management regulations will put this critical energy supply at risk.”

The change in bonding rates is a key element of the new rule, officials said. The previous rate of $10,000, established in 1960, was far too low to force companies to clean up old drilling sites and did not cover potential costs to reclaim a well, officials said. As a result, taxpayers frequently end up covering cleanup costs for abandoned or depleted wells if an operator refuses to do so or declares bankruptcy.

 

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