‘Keep It in the Ground’ prompts online oil and gas leasing auctions

On a Thursday afternoon in May, hundreds of climate activists jammed the parking lot and lobby of a Denver Holiday Inn, blockading the entrance and chanting, “We are unstoppable! Another world is possible!” They were trying to halt a U.S. Bureau of Land Management oil and gas lease sale, but succeeded only in delaying it for a few minutes. Still, the protesters left pleased that they had drummed up media coverage and riled industry representatives.

Lease sales, where energy companies bid for the right to drill for oil and gas on federal land, used to be mundane events. But lately they’ve become raucous, with climate activists in Salt Lake City, Denver and Reno urging the government to leave fossil fuels in the ground. Eventually, they hope to end public-lands drilling altogether.

In response, some industry leaders want auctions to move online — eBay style. The BLM agrees, and will host its first online sale this September. Explaining the move to Congress this March, BLM Director Neil Kornze said online sales are cheaper to host and will speed up transactions. He added that the agency is on “heightened alert” and concerned about safety as a result of incidents like the militia occupation at Oregon’s Malheur National Wildlife Refuge. “And so a situation that we are not used to — separating out who is a bidder and who is not — gives us pause,” Kornze said.

So far, environmentalists are uncertain whether an online system will help or hurt their cause. “If this is part of a broader effort to make BLM processes more efficient and transparent, it’s a great idea,” says Nada Culver, director of The Wilderness Society’s BLM Action Center. But if it simply allows energy companies to escape growing scrutiny, “it’s not progress.”

The BLM manages over 1 million square miles’ worth of underground minerals, enough to cover Alaska, Texas and then some. The development process goes like this: The agency identifies areas it deems appropriate for drilling, and then industry nominates parcels up to 2,560 acres. Those then go up for sale at quarterly auctions, where bidding starts at $2 an acre.

Environmentalists have long argued that the system is too accommodating to industry. For instance, the details of lease terms, such as exemptions from environmental analyses, are often negotiated without public input. That has been changing under President Barack Obama. Since 2010, the BLM has ushered in a series of reforms designed to increase community involvement, including in decisions over where and how drilling occurs.

Now industry has its own complaints. Since 2010, the BLM has held fewer auctions in order to save money, and fewer parcels have been offered, says Kathleen Sgamma with the Western Energy Alliance, an oil and gas trade group. Though production at existing wells has slowed due to the current glut of gas and oil, companies need new leases to prepare for the market’s next uptick, Sgamma says. She hopes online auctions will allow the BLM to open more parcels to bidding.

But protests are also a factor. The BLM first considered moving things online after climate activist Tim DeChristopher successfully bid on 14 parcels in Utah in 2008 with no intention of paying or drilling them. DeChristopher went to prison for 21 months, and helped spark the campaign to halt public-lands drilling.

This fall, the BLM will begin phasing in online-only lease sales. Some environmental groups see the shift as further evidence of industry’s undue influence on public lands, since it could help screen out non-industry bidders, such as author and environmental activist Terry Tempest Williams, who bought parcels at a Salt Lake City sale in February. Jason Schwartz, spokesman for Greenpeace USA, argues that the agency is caving to “industry pressure to take the auctions somewhere protests can’t find them.”

But others, like The Wilderness Society, believe that online leasing could increase transparency. Under the current system, companies nominate parcels anonymously and often pay independent land-men to bid, making it hard to tell who bought what. This kind of information matters to communities, Culver says, because some companies are more responsible than others.

Companies can also stockpile leases and then receive “suspensions” that allow them to hold onto parcels without developing them within 10 years — a delay that can cost taxpayers millions of dollars in lost rents and royalty payments. A 2015 analysis by The Wilderness Society tallied 3.25 million acres of suspended oil and gas leases in the West, some dating to the 1970s. The practice also locks in development rights, even if they conflict with conservation, recreation or other emerging local land uses. “All of that is very much shielded from the public view,” adds Culver, whose group pored over paper files in numerous field offices. “Once the lease is sold, it kind of disappears.” A web-based database detailing leases and terms could make such trends easier to track.

The industry isn’t interested in creating an online information clearinghouse, however, nor has the BLM suggested doing so. But even if online auctions completely replace in-person sales and make it harder to protest, Schwartz says activists won’t be stopped.

The Wilderness Society isn’t involved with the protest movement, but Culver agrees that the drilling dissenters are here to stay. “There is a general heightening of awareness of how much control the oil and gas industry has in this process,” she says. And people are more engaged than they’ve ever been: “It’s a brand-new and not necessarily comfortable day for the industry.”

Correspondent Joshua Zaffos writes from Fort Collins, Colorado. Follow @jzaffos

• Energy & Industry
• Climate Change
• Mountain West
• Natural Gas
• Oil
• Bureau of Land Management
• Barack Obama