Saturday, October 23, 2021

Don’t leave critical revenue in the ground

by John Sanford
| October 10, 2021 12:00 AM

Montanans have been through a lot over the past year and a half.

It is important, now more than ever, that lawmakers make smart policy decisions that offer Montana and the rest of the country the best opportunities to boost their economies and jumpstart our recovery. But as recent news regarding federal oil and gas leasing has shown, that may be easier said than done.

As part of a move to consider environmental impacts in energy policy, the Department of Interior has undertaken a review of our nation’s federal oil and gas program. Originally, to begin the review, a ban was instituted at the start of this year that halted all oil and gas leasing on federal lands before it was later struck down in a federal court.

Now, oil and gas leasing and drilling looks set to resume, but the review from the Interior is still yet to be released—a potential long-term or permanent federal leasing ban could still be on the table.

As a scientist with over 17 years of private sector experience working in the oil and gas industry as a geospatial analyst, I believe that any sort of permanent leasing ban would have catastrophic effects on Montana’s economy and recovery from the pandemic.

My own practice, Geospatial Consultants, specializes in quantifying and visualizing the statistics of the economic and social impacts of state and federal legislation and other various phenomena. Essentially, we believe that trends and complex relationships between people, places, data, resources, and situations can be best understood as statistics visually described and shown on a map and dashboard. This geo-referenced data can be applied to nearly any happening on Earth, spanning a wide variety of industries—including oil and gas.

For example, when you combine land ownership, mineral ownership and federal lease data with operator or vendor supplied oil and gas production and governmental tax data into a geospatial analysis, one can evaluate, illustrate, and statistically quantify the potential amounts of oil and gas being left in the ground. The direct impacts of this can be statistically quantified as revenue losses to the state, legislative districts, counties, public schools, and landowners.

In Montana—should a permanent leasing moratorium be enacted—the amount of oil and gas that would be left untapped in the ground corresponds to millions in lost and unrealized revenue. We cannot afford to have one of our most valuable sources of funding cut off.

The money derived from oil and gas operations on our state’s federal lands has long provided our communities with significant funding for schools, infrastructure, and conservation efforts and could continue to do so well into the future. In 2020, revenues from operations on federal lands totaled over $20 million and constituted 5.6% of Montana’s General Fund Budget, which distributes funding for capital outlays.

The oil and natural gas industry also supports thousands of jobs and millions in economic activity. According to the American Petroleum Institute, the sector in Montana supported over 53,000 jobs, $3.2 billion in wages, and every direct job in the natural gas and oil industry generates an additional 2.7 jobs in Montana. Montana is also ranked among the highest states for the percentage of total economic contributions by the natural gas and oil industry, generating $6.3 billion toward our state’s Gross Domestic Product (GDP).

A federal oil and gas leasing ban also weakens our nation’s energy independence and puts us at the whim of our foreign counterparts. It was found that through 2030, if a ban were to be put into place, the U.S. would spend $500 billion more on energy from foreign suppliers. Our US economy would also take a hit, with nearly one million jobs lost by 2022 and over $9 billion in revenue, including funding for education and conservation programs, in jeopardy.

There is also an environmental aspect to consider with such a ban. If we outsource our energy needs to foreign nations with fewer regulations and less stringent oversight, then the additional carbon offsets during the extraction and transportation of foreign fuels into the United States could easily offset and surpass the emissions that we supposedly save by ending federal leasing.

While the pursuit of more climate-friendly policies is admirable and will help our planet, a federal leasing ban does not achieve that. It would be like taking one step forward and two steps backward. If we wish to enact real change that protects our environment, then we must instead view the oil and natural gas industry as a partner in our nation’s inevitable energy transition, rather than an adversary.

John Sanford is Founder and Principal Geospatial Analyst of Geospatial Consultants.