The U.S. Interior Department on Monday proposed rule changes to allow energy companies to more easily combine oil and gas output from multiple leases using the same well pad, which could save the industry as much as $1.8 billion per year, it said.
The proposed rule change, which would mostly affect onshore oil and gas drilling in the U.S. West, would ease limits on so-called commingling, which the department said would make operations more efficient.
President Donald Trump’s tax cut law directed the Interior secretary to approve commingling applications.
Current U.S. Bureau of Land Management regulations restrict commingling to leases that have identical mineral ownership, royalty rates and revenue distribution. Interior said the requirements create barriers in parts of the West where mineral ownership is complex.
The change would allow oil and gas operators to more accurately track production and calculate the royalties drillers pay to the federal government and to tribes for fossil fuels produced on public and tribal lands, the department said.
“The current rules were written for a different era,” Interior Secretary Doug Burgum said in a statement. “These updates will help us manage public resources more efficiently, support responsible energy production, and make sure taxpayers and tribes get every dollar they’re owed.”
The Western Energy Alliance has pushed for greater access to commingling, saying it is one of the quickest ways to increase production onshore, and that many projects have been held up for years by the Interior’s Bureau of Land Management not approving federal and private oil and gas in consolidated projects.
The United States is already the world’s top oil and gas producer and Trump “energy dominance” policy pushes his administration to reduce regulation on fossil fuels, much of which is meant to slow climate change and pollution.
(Reporting by Timothy Gardner, editing by Deepa Babington)