Onshore oil & gas

Plan

BLM field offices prepare comprehensive Resource Management Plans (RMPs). RMPs guide leasing decisions on federal lands. This specifies which lands are open to oil and gas leasing, and which lands are closed. BLM field offices develop RMPs in line with multiple-use and sustained-yield principles. BLM also engages the public and various levels of government.

Lease

BLM state offices award leases for oil and gas resources on lands designated as open for leasing within RMPs through competitive lease auctions open to the public. Competitive auctions are held frequently, often quarterly.

BLM relies on a free market to establish value for the parcels offered. During the live auction, bidders compete for a lease by placing bids. The BLM state office awards the lease to the highest bidder. Once the BLM state office accepts a bid, the bidder must pay the bonus as well as the first year's rent to BLM to secure the lease.

Explore

The lease holder must file an Application for Permit to Drill (APD) with BLM. An APD allows a lease holder to explore the leased land for oil and gas deposits. To apply for an APD, lease holders must submit a drilling and surface use plan of operations. The plans include 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. BLM uses an Environmental Impact Statement (EIS), an Environmental Assessment (EA), a Categorical Exclusion (CX), or Documentation of NEPA Adequacy (DNA) in accordance with the National Environmental Policy Act. Before awarding the permit, BLM must also ensure that conditions for the National Historic Preservation Act and the Endangered Species Act are met. Once granted, the APD is valid for three years. During the exploration phase, companies pay rent to ONRR.

Much of this drilling activity today targets oil and gas trapped in shale rock formations, which became profitable to extract starting in the early 2000s with new methods like horizontal drilling and hydraulic fracturing — commonly known as "fracking." 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. The Bakken Region in North Dakota and Montana.

Develop

The APD is one of many permits a lease holder must get. It allows permit holders to move from exploration to development and production. Operators and lease holders need to get all the necessary permits and licenses for companies to be able to build their operations and extract oil and gas from federal lands.

During development and production, BLM performs several inspections. Inspections enforce lease terms and track health, safety, and environmental concerns. When operators extract oil or gas in paying quantities, the lease holder stops paying rent and starts paying  royalties to ONRR.

Decommission and reclaim

Before an oil and gas operation starts, the operator includes a Reclamation Plan in the Surface Use Plan that BLM must approve. Operators and lease holders must begin reclamation before an operation ends.

The lease holder also posts a bond of at least $150,000. BLM holds that bond during the operation to enforce lease terms and reclamation. The operator must conduct interim reclamation throughout the life of the operation. This concludes with appropriately plugging wells and restoring the ecosystem. The BLM field office performs inspections throughout the operation. Inspections ensure that interim reclamation takes place, wells are appropriately plugged, and the ecosystem is restored.