Biden Administration's Permit Approvals in Oil and Gas Drilling: An Analysis of Trends and Metrics
The oil and gas drilling industry operates under a complex permitting process involving multiple stages, from leasing to production, and finally to permitting for dismantling and cleanup after production ceases. This multifaceted system underlines the crucial role of permitting in the industry. Since the current administration change, there has been considerable interest in how these permits have fared under the Biden administration, especially given the backdrop of a surge in fuel prices and discussions about cleaner energy transitions.
Permit Stages and Their Importance
The journey from leasing to production involves several permits, each with specific requirements and procedures. The first step is leasing, which allows exploration companies to acquire the rights to a specific tract of land. Following that, exploration permits, drilling permits, and production permits are required. Finally, there are permits for dismantling and cleanup.
Trends and Metrics
While the initial surge in 2020 might indicate some skepticism by oil companies regarding the Biden administration's stance on energy policy, the trend has actually trended positively since the administration's inauguration. Specifically, permit approvals under the Biden administration have averaged 336 per month, with a 98% approval rate, which is significantly higher than the most favorable year under the Trump administration.
Monthly Approval Rates
The number of permits approved has remained steady, with 2022 averaging about the same as the first three years of the Trump administration when looking at the same months. This steady approval rate suggests continuity in the overall permitting process, despite the initial spike in 2020 and the halt in leasing and permits due to legal challenges.
National Statistics
More strikingly, the number of permits approved in the six most productive states under the Biden administration (New Mexico, Wyoming, Colorado, Utah, North Dakota, and California) has surpassed the combined yearly totals from 2017, 2018, and 2019, the first three years of the Trump administration. As of November 30, 2021, a total of 3605 permits were approved, reflecting a robust push for drilling and production despite the initial hype in 2020.
Current Trends in 2022
In 2022, however, the trend has slowed down. Monthly average approvals are about the same as the first three years of the Trump administration for the same months, but far fewer than in 2021 or 2020. This slow-down can be attributed to a drop in application rates, likely due to a focus on reopening wells that were closed due to the pandemic and lack of demand. The rate of approval has remained steady, with around 60% of the acreage with approved permits currently unused, marking a historic high.
Legal Challenges
A significant factor affecting the current permitting landscape is a legal challenge that saw a federal judge halt leasing and permits in the Gulf of Mexico. Judge Rudolph Contreras ruled that the Biden administration had relied on faulty analysis of greenhouse gas emissions in the largest lease and permit offering in federal lands. This judicial action has potentially slowed down the permitting process, adding another layer of complexity to the industry's operations.
Conclusion
Overall, the amount of oil and gas drilling permits approved under the Biden administration has not declined but has gradually returned to a more normal pace. This underscores a significant alignment with the Trump administration in terms of overall permit approvals, although there has been a temporary surge and legal challenges affecting the industry. The steady approval rate and high approval percentages indicate that the Biden administration remains committed to supporting the oil and gas industry, with a focus on delivering permits to meet the industry's needs while navigating legal and policy challenges.