Oil and gas extraction on federal land in Tennessee

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Oil and gas on federal land
State fracking policy
State energy policy
Glossary of energy terms

Across Tennessee, 736 acres of federal land were leased for crude oil and natural gas development in fiscal year 2014. Roughly 26 percent of the land owned by the federal government across the United States can be leased to private individuals and companies for energy development, including drilling for crude oil and natural gas, solar energy, and geothermal energy. Oil and natural gas drilling on federal lands in Tennessee is primarily regulated by the U.S. Bureau of Land Management (BLM), although other federal land management agencies (the U.S. Forest Service, the U.S. Fish and Wildlife Service or the National Park Service) may be involved. According to the Congressional Research Service, these federal agencies manage their acreage with three primary purposes: "preservation, recreation, and [the] development of natural resources."

Tennessee produced no oil or natural gas on federal lands in fiscal year 2014.

See also Fracking in Tennessee and Oil and natural gas extraction on federal land

Background

See also: Economic impacts of fracking and Environmental impacts of fracking

The degree to which federal land agencies try to balance recreation, preservation and energy development differs, and the attempt to balance them can lead to conflict. One example of this conflict began in Utah in September 2015 when a regional BLM office moved to make 73,000 acres available to be leased for crude oil and natural gas extraction. Historic preservationists at the Utah Rock Art Research Association and environmentalists at the Southern Utah Wilderness Alliance contested the BLM's decision to allow leasing "in areas rich in cultural resources." Government officials at the Utah Public Lands Policy Coordinating Office, meanwhile, thought that more acreage should be opened up for oil and gas development. The regional BLM office had until the November 2015 sale to decide which acres would be available to lease at a public auction.

Mineral rights

The United States is one of the few countries where property owners (including the federal government) can own the surface right, the right to use and build on their land, but do not always own the mineral right, the right to use the minerals located under the property. Depending on the state, the mineral rights may have been sold in the past and may now belong to someone other than the surface owner (also known as split-estate). In fact, those mineral rights may belong to more than one individual, a company or many individuals who now have the right to extract those minerals. In some states this can happen without permission from the property owner; this can cause tension between the mineral owner (or whoever is leasing the mineral rights) and the property owner. The federal government holds the mineral rights for almost all federal lands, with the exception of 4 million acres of acquired lands.

A map of all federally owned land in the United States Click to enlarge.

Federal lands and Indian reservations in Tennessee Click to enlarge.

Bureau of Land Management

See also: Oil and natural gas extraction on federal land

Across the United States, the U.S. Bureau of Land Management (BLM) manages 247.8 million surface acres of land in addition to 700 million acres of subsurface mineral resources. Of these 700 million subsurface acres, around 166 million acres (23.71 percent) can be leased for energy development. The BLM manages its lands with a "multiple-use, sustained-yield" mandate, which requires the agency to balance many activities on its land, including renewable and traditional energy development, grazing, recreation and conservation. Most oil and gas leases on federal land are managed by the BLM in coordination with the federal agency that is responsible for that land or any non-federal owners (if, for instance, the federal government leased the mineral rights below land that was owned by a private individual).

For much of the data below, the BLM groups all 31 states east of the Mississippi River together as "Eastern States" and provides data for these states collectively. This is the case with the table below. The column showing split-estate federal minerals refers to land where the federal government owns the mineral rights and a private owner has the surface rights to an area. According to the BLM, the exact figure of split-estate ownership is not known and ranges between 55 million acres and 60 million acres. The BLM is responsible for overseeing the development of minerals on some American Indian-owned lands, the total acreage of which is included in the table below. The column titled "BLM-managed acreage" includes acreage where the BLM owns both the surface and mineral rights.

Surface and subsurface land ownership for the BLM, in million of acres for fiscal year 2014
State	Total state acreage	Federal mineral acreage	Federal surface acreage	BLM-managed acreage	Split-estate federal mineral acreage	American Indian trust mineral acreage
Tennessee	0	0	0	0	0	0
Kentucky	--	--	--	--	--	--
Alabama	--	--	--	--	--	--
Georgia	--	--	--	--	--	--
Eastern states*	--	40	40	0.10	0.30	2.30
U.S. total	1,529.72	699.70	643.20	247.90	57.20	56
Note: *Eastern states includes all 31 states east of the Mississippi River. Source: U.S. Bureau of Land Management, "Mineral and Surface Acreage Managed by the BLM" U.S. Bureau of Land Management, "Public Land Statistics 2014"

Regulation

See also: Regulation of oil and gas drilling on federal lands and BLM oil and gas permits by state

The process to develop oil and natural gas on federal lands has five phases:

Average wait times for an Application for Permit to Drill
Click to enlarge.

1. Land use planning

Parcels of land where oil and gas drilling can occur (hereafter called parcels) are identified.

2. Lease sales

Parcels of land are leased through a competitive auction.

3. Well permitting

Oil and gas operators that obtain a lease must receive a permit from the BLM allowing them to drill.

4. Well operations and production

Wells are drilled and operated.

5. Well reclamation

Wells are plugged (closed) and the area is returned to its previous condition once oil or gas extraction is complete.

Leases

See Leases for oil and gas drilling on federal lands for more information.

Leases can be held by any adult citizen of the United States. Corporations and associations organized under federal, state or local law can also hold leases. Bidding for leases is done at an oral auction at a BLM state office. Scroll over the graph below to see the number of onshore oil and natural gas leases across the United States from fiscal year (FY) 1985 to 2014. The graph also shows the number of leases where oil or gas was produced (producing leases) across this time period. The number of active leases peaked in 1985 when there were 116,985 leases. Producing leases peaked in fiscal year 2014 with 23,657 producing leases. From FY 1985 to FY 2014, there has been an average of 60,644 leases and 21,043 producing leases.

Onshore oil and gas leases

Scroll over the chart to see the number of oil and gas leases that year.

In FY 2014, there were two oil and gas leases in effect in Tennessee. This is more than the neighboring state of Georgia, which had no leases in effect. Of the states listed below, Alabama had the most leases, with 147 in effect.

Leases statistics for Tennessee and adjacent neighboring states, fiscal year 2014
State	Leases in effect	Total acres leased	Leases issued that year	Acres leased that year	Producing leases	Surface acres federally owned	Subsurface acres federally owned
Tennessee	2	736	0	0	2	--	--
Kentucky	69	38,073	0	0	54	--	--
Alabama	147	80,540	4	471	24	--	--
Georgia	0	0	0	0	0	--	--
U.S. total	46,183	34,592,450	1,157	1,197,852	23,657	643,200,000	699,700,000
Note: "--" indicates data were not available. Sources: U.S. Bureau of Land Management, "Oil and Gas Statistics" U.S. Bureau of Land Management, "Mineral and Surface Acreage Managed by the BLM" U.S. Bureau of Land Management, "Public Land Statistics 2014"

Lease sales

In fiscal year (FY) 2014, the BLM collected $202,534,383 in revenue from oil and gas lease sales across almost 5.8 million acres of land. An average of 77.24 percent of the acres the BLM put up for lease received a bid in FY 2014. A majority of the acres put up for lease in FY 2014 were in Alaska. Parcels auctioned off in July 2014 in New Mexico, Oklahoma and Texas had the highest revenue of any single auction that year, $83,104,824. This averaged to $6,256.95 for each of the 13,282 acres of land auctioned. In FY 2014, lease sales for federal land across the 31 states east of the Mississippi River totaled $1,003,773. The table below shows lease sale statistics listed by date for Tennessee and that state's closest neighboring states for which the BLM provided data. The full table is available here.

Oil and gas lease sales, fiscal year 2014
BLM state office	Date of sale	Total revenue	Parcels posted	Acreage posted	Parcels offered day of sale	Acreage offered day of sale	Parcels receiving bids	Percent of parcels receiving bids§	Acreage receiving bids	Percent of acreage receiving bids§
Eastern states*	9/18/2014	$49,633	2	80	2	80	2	100.00%	80	100.00%
Eastern states*	6/19/2014	$22,291	9	802	9	802	8	88.89%	642	80.05%
Eastern states*	3/20/2014	$425,937	23	18,244	22	18,224	22	100.00%	18,224	100.00%
Eastern states*	12/12/2013	$505,912	18	1,480	17	1,280	17	100.00%	1,280	100.00%
U.S. total	--	$202,534,383	1,752	5,798,551	1,679	5,683,736	956	--	919,378	--
Note: *Eastern states include the 31 states east of the Mississippi River § Percentages are for day of sales Source: U.S. Bureau of Land Management, "Oil and Gas Lease Sales, Fiscal Year 2014"

Application for Permit to Drill

Before drilling can occur on federal lands, an Application for Permit to Drill (APD) must be submitted and approved by the U.S. Bureau of Land Management (BLM). In fiscal year (FY) 2014, the BLM approved 3,769 APDs. During that same time, it took the BLM an average of 94 days to review an APD and it took oil and gas operators 133 days to resolve any issues the BLM found with the APD, according to the BLM. The table below shows drilling permits approved by fiscal year in Tennessee and adjacent states. In FY 2014, Tennessee had no applications approved.

Approved Applications for Permit to Drill, fiscal years 2004 to 2014
State	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014
Tennessee	0	0	0	0	0	0	0	0	0	0	0
Kentucky	4	--	0	3	0	0	0	0	0	0	0
Alabama	6	0	0	1	0	1	0	0	2	0	0
Georgia	0	0	0	0	0	0	0	0	0	0	0
U.S. total	6,052	4,579	6,738	7,124	6,617	4,487	4,090	4,244	4,256	3,770	3,769
Source: U.S. Bureau of Land Management, "Oil and Gas Statistics"

Inspections

See Inspections of oil and gas drilling on federal lands for more information.

The BLM inspects oil and gas drilling sites on federal lands several times during the drilling process. Inspections are overseen by employees of the Inspection and Enforcement Program at the BLM. The following graphs show the number and type of inspections performed by the BLM from 2007 to 2014. Bureau of Land Management employees performed almost 30,000 inspections on oil and gas sites across the United States in 2014. Across the years shown, inspections peaked in 2011 when agency employees performed almost 35,000 inspections. Over one-third of fiscal year 2014 inspections were done by employees of the Wyoming field office. The second most inspections were performed by employees out of the Colorado field office.

BLM oil and gas inspections, 2007 to 2014 Click to enlarge.

Oil and gas inspections by state Click to enlarge.

Key

Oil and gas production

The Office of Natural Resources Revenue (ONRR) provides data on mineral production on federal lands. The tables below show federal onshore oil and natural gas production (in terms of the amount sold) for fiscal years 2004 to 2014 for Tennessee, its adjacent states (provided for comparison) and the United States. Of the states listed below, Tennessee produced the least oil from federal lands in FY 2014, no barrels. Alabama produced the most, 25 thousand barrels.

Crude oil production on federal lands in Tennessee and adjacent states in thousands of barrels
Click to enlarge.

Crude oil production on federal lands in Tennessee and adjacent states, in thousands of barrels, fiscal years 2004 to 2014
State	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014
Tennessee	0	0	0	0	0	0	0	0	0	0	0
Kentucky	12	13	11	12	14	13	13	13	12	12	11
Alabama	322	237	103	70	64	44	40	38	34	31	25
Georgia	0	0	0	0	0	0	0	0	0	0	0
U.S. total	97,180	97,238	102,164	104,872	103,134	104,499	107,880	113,375	125,270	137,029	148,778
Note: Oil includes black wax crude, condensate, drip or scrubber condensate, fuel oil inlet scrubber, oil, oil lost, other liquid hydrocarbons, sweet crude and yellow wax crude. These data are collected in terms of sale years, which are "transactions for sales that took place in a given fiscal year and do not include adjusted or corrected transactions for sales that took place in previous fiscal years." Source: Office of Natural Resource Revenue, "Statistical Information"

According to the ONRR, Tennessee produced no natural gas in fiscal year 2014. Alabama produced the most, 18,431 MMCF.

Natural gas production on federal lands in Tennessee and adjacent states in million cubic feet (MMCF)
Click to enlarge.

Natural gas production on federal lands in Tennessee and adjacent states, in MMCF, fiscal years 2004 to 2014
State	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014
Tennessee	0	0	0	0	0	0	0	0	0	0	0
Kentucky	272	248	278	285	315	271	218	167	120	84	79
Alabama	53,478	47,568	44,490	36,463	33,778	30,362	28,210	23,002	19,946	18,990	18,431
Georgia	0	0	0	0	0	0	0	0	0	0	0
U.S. total	2,403,287	2,580,017	2,660,419	2,891,765	3,081,528	3,196,500	3,033,285	2,918,572	2,906,698	2,655,876	2,499,870
Note: Natural gas includes coalbed methane, flash gas, fuel gas, gas lost (flared or vented), nitrogen, processed (residue) gas, unprocessed (wet) gas and gas plant products. These data are collected in terms of sale years, which are "transactions for sales that took place in a given fiscal year and do not include adjusted or corrected transactions for sales that took place in previous fiscal years." Source: Office of Natural Resource Revenue, "Statistical Information"

Of the states listed below, Tennessee had the third highest number of acres where oil or gas was being produced ("Producing acres" in the table), 736 acres in fiscal year 2014. Kentucky had the most, 32,916 acres. Tennessee had no permits approved, no spudded (or drilled) wells, ten producing wells (wells producing oil or natural gas) and ten well completions (or wells ready for production). Kentucky had more wells, with 161 producing wells and 161 well completions.

Production related statistics for Tennessee and adjacent neighboring states, fiscal year 2014
State	Producing acres	Permits approved	Wells spudded	Producing wells	Well completions
Tennessee	736	0	0	10	10
Kentucky	32,916	0	0	161	161
Alabama	7,707	0	0	30	30
Georgia	0	0	0	0	0
Note: "--" indicates data were not available. Sources: U.S. Bureau of Land Management, "Oil and Gas Statistics" U.S. Bureau of Land Management, "Mineral and Surface Acreage Managed by the BLM" U.S. Bureau of Land Management, "Public Land Statistics 2014"

Revenue

The federal government collects several different types of taxes on oil and gas production from federal land including royalties, rents, bonuses and other revenue. Royalty fees are charged after oil or natural gas is produced in paying quantities. The fees apply to the revenue collected from selling that oil or natural gas. For onshore federal lands, the royalty fee is 12.5 percent although there are exceptions to this rate. Rents are an annual fee of $1.50 per acre for each year for the first five years of a lease; each year after which the fee is $2.00 per acre. Bonuses are the amount collected from the highest bidder when land is leased. Other revenue includes interest, settlement agreements, and estimated and minimum royalties. Of the revenue that is collected, 50 percent goes to the state where the production occurred, 40 percent goes to the Land and Water Conservation Fund and the remaining 10 percent goes to the U.S. Treasury.

The table below shows total revenue from onshore oil and gas production on federal lands for Tennessee and adjacent states in thousands of dollars. Tennessee collected no revenue. Alabama collected the most revenue of the states below, $1,572 thousand. Across the United States, total revenue collected increased by 76 percent, from $1.89 billion in FY 2004 to $3.33 billion in FY 2014.

Oil and gas revenue from federal lands in Tennessee and adjacent states, in thousands of dollars, fiscal years 2004 to 2014
State	FY 2004	FY 2005	FY 2006	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014
Tennessee	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Kentucky	$41	$28	$68	$23	$22	$21	$21	$22	$15	$48	$60
Alabama	$1,761	$1,770	$1,934	$3,384	$2,526	$1,058	$1,099	$1,882	$2,587	$800	$1,572
Georgia	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
U.S. total	$1,887,983	$2,798,163	$3,304,064	$2,779,740	$4,341,089	$2,207,027	$2,864,797	$3,178,239	$2,762,220	$2,994,569	$3,326,031
Note: Revenue includes reported royalties, rents, bonuses and other revenue. All data are for onshore production by sales year. "--" indicates data were not available. Sources: Office of Natural Resources Revenue, "Statistical Information"

Oil and gas revenue from production on federal lands

Scroll over a state to see the revenue collected in FY 2014. All revenue is in thousands of dollars.

Other federal agencies

Forest Service

Across the United States, the U.S. Forest Service (USFS) manages 192.9 million acres of land. The USFS, like the BLM, has a multi-use mandate, and must manage its lands for timber harvesting, conservation, fish and wildlife management, and watershed protection. The USFS is unique among the agencies listed on this page in that the USFS is part of the Department of Agriculture and not the Department of the Interior.

Mining on USFS lands is overseen by the Minerals & Geology Management (MGM) division. According to MGM over 5 million acres, or approximately 2.6 percent, of its land is leased for oil, gas, coal and phosphate mining. This production is valued around $2 billion annually. The USFS has a memorandum of understanding with the Bureau of Land Management for managing oil and gas drilling on National Forest System lands. The memorandum allows the BLM to oversee certain oil and gas leases on National Forest System lands.

Fish and Wildlife Service

National Wildlife Refuges (black dots) and unconventional oil and natural gas reserves (gray shading)
Click to enlarge.

Across the United States, the U.S. Fish and Wildlife Service (FWS) manages 300.2 million acres of land. The main purpose of the FWS is to conserve species, especially those given protection under the Endangered Species Act. As part of its work, the FWS manages the National Wildlife Refuge System, which contains some areas where oil and gas development occurs.

According to the FWS, oil and gas development occurs on National Wildlife Refuge System lands under two conditions:

“	1) the wells/mineral rights remained in private, state/local government, or tribal ownership when a refuge was established or lands were added, and 2) in Alaska, the wells/mineral rights are part of land interests conveyed to Native corporations under the Alaska Native Claims Settlement Act, or held by the State of Alaska and other private landowners.	”
—U.S. Fish and Wildlife Service,

Management of any oil or gas drilling is done under the agency's Oil and Gas Program. In May 2015, the FWS stated that there were 5,000 total wells across 103 refuges and four Wetland Management Districts. Of these wells, 1,700 wells were active and 450 wells were unplugged (no longer producing, but not fully restored). The map in this section has black dots for each National Wildlife Refuge and is shaded in dark gray showing unconventional oil and gas reserves across the 50 states.

National Park Service

Across the United States, the National Park Service (NPS) manages 79.7 million acres of land. Resource extraction, including oil and gas drilling, timber harvesting, etc., is generally not permitted on these lands. Similar to the Fish and Wildlife Service, the NPS manages lands that had private mineral rights owners before the NPS came to operate the land. The NPS requires those extracting oil and gas to obtain approval of their extraction plan before oil and gas activity can occur. If this plan is approved and the operator gets a reclamation bond, then drilling can occur.

Hydraulic fracturing on federal lands

On March 20, 2015, the Obama administration released a new ruling that governs fracking on federal land. The rules were not well received by oil and natural gas companies or environmental groups. The U.S. Bureau of Land Management (BLM) began drafting this rule after a November 2010 public forum. Federal lands can be leased to private mining companies, including oil and natural gas companies, for exploration and production under the BLM Oil and Gas Management program. As of June 2013, there were 47,427 oil and natural gas permits across 36,092,482 acres of federal land. According to the BLM, fracking was used on almost 90 percent of the 2,800 wells drilled on federally-managed lands in 2013.

Under these new rules, drillers that use fracking to access oil or natural gas must adhere to the following:

• Submit information to the BLM about the geology of the well, including the length and location of fractures and faults
• Disclose the chemicals used while fracking (with exceptions for trade secrets)
• Store flowback and other waste water in above ground tanks
• Abide by new rules for well cementing, casing and integrity testing

According to the Secretary of U.S. Department of the Interior, Sally Jewell, "This updated and strengthened rule provides a framework of safeguards and disclosure protocols that will allow for the continued responsible development of our federal oil and gas resources." Erik Milito, the director of industry operations for the nation's largest oil and natural gas trade association, the American Petroleum Institute, argued that the new "rule is just one more barrier to growth ... a duplicative layer of new federal regulation [that] is unnecessary."

Two groups, the Independent Petroleum Association of America and the Western Energy Alliance, filed suit almost immediately following the release of the new rule. "The lawsuit charges that the new regulations are based on 'unsubstantiated concerns' that lack any scientific basis." Twenty-seven Senate Republicans filed a bill that would block the regulations from taking effect. As of May 18, 2015, four states had agreed to challenge the new rule in court: Colorado, North Dakota, Utah and Wyoming.

On September 30, 2015, Scott W. Skavdahl of the U.S. District Court for Wyoming blocked the rule from going into effect. According to the judge, "the fracking rule creates an overlapping federal regime, in the absence of congressional authority to do so, which interferes with the states’ sovereign interests in, and public policies related to, regulation of hydraulic fracturing." While the case works its way through the court, the BLM will continue to process oil and gas drilling permits as prescribed by current regulations.

The final rule can be read here.

Recent news

The link below is to the most recent stories in a Google news search for the terms Oil gas federal land Tennessee. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

Oil and gas extraction on federal land in Tennessee - Google News

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See also

• 

  Energy policy in the United States

• 

  Fracking in the United States

• 

  Environmental policy in the United States

References

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