The Biden administration intends to hold oil and gas companies accountable for their record profits. In April, the Interior Department finalized a new rule that revises bonding requirements, royalty rates, and minimum bids for drilling on federal land. The Bureau of Land Management’s Fluid Mineral Leases and Leasing Process rule is the first comprehensive update to the federal onshore oil and gas leasing program since 1988. It is also the first update to minimum bonding levels since 1960 and the first increase in royalty rates in over 100 years.
“These are the most significant reforms to the federal oil and gas leasing program in decades, and they will cut wasteful speculation, increase returns for the public, and protect taxpayers from being saddled with the costs of environmental cleanups,” said Secretary Deb Haaland.
Industry Laments “Anti-Business” Regulatory Environment
Despite the industry’s access to drilling on federal land, the oil and gas industry complains about the BLM’s new rule. The Vice President of the American Petroleum Institute (API), Holly Hopkins, protested the “overly burdensome land management regulations.” She claimed the new rule “will put this critical energy supply at risk.” Dan Naatz, chief operating officer of the Independent Petroleum Association of America (IPAA), thinks the BLM’s rule “will have the effect of driving mineral production off of these areas.”
Kathleen Sgamaa, president of Western Energy Alliance, says her organization and others will challenge the new rule. “We’re pleased to be joined by our sister trade associations in challenging a rule that has such a detrimental economic impact in states across the West.”
Record Oil and Gas Profits In 2023
Despite their pushback on the Biden administration’s policies, the oil and gas industry doesn’t hurt for money. The top five publicly traded oil and gas companies with leases on public lands made $59.3 billion in new profits in 2023, according to an Accountable.US report.
“Big Oil CEOs are paying themselves handsomely off the massive profits they’re making drilling on public lands,” said Chris Marshall, a spokesperson for Accountable.US. “What’s worse is that they’ve only been paying a pittance for developing public minerals. The Biden administration was right to hold accountable these companies for their rampant exploitation of taxpayers and consumers.”
ExxonMobil
ExxonMobil tops the list as the largest publicly traded holder of federal onshore leases by acreage and one of the largest multinational oil companies in the world. ExxonMobil has 458,466 acres of public land in over 2,000 leases through subsidiaries. In 2023, the company exceeded expectations with a $36 billion profit, paid out $14.9 billion in shareholder dividends, and bought back $17.2 billion in stocks.
ExxonMobil increased the pay of its CEO, Darren Woods, by over $1 million from 2022. Woods appeared on CNBC, bragging about his company’s earnings. “We’re growing earnings and cash flow faster than our peers,” Darren Woods said on CNBC. “We’ve more than doubled our earnings’ power from 2019 to 2023.”
“Our consistent strategy and execution excellence across the business delivered industry-leading earnings and enabled us to return more cash to shareholders than our peers in 2023 1,” said Woods in a statement on 2023 results.
ConocoPhillips
ConocoPhillips, a large multinational oil and gas company based in Houston, Texas, has 1,134 leases on 197,973 acres of public land. In 2023, the company made $11 billion in profits and returned $11 billion to shareholders through stock buybacks and dividends.
“We achieved record production, reached several key milestones across our global operations, and returned $11 billion to shareholders,” said Ryan Lance, chairman and CEO of ConocoPhillips, in a statement on 2023 profits. “We also continued to enhance our portfolio by opportunistically acquiring the remaining 50% of Surmont, reaching a final investment decision on the Willow project in Alaska and further progressing our global LNG strategy.”
Last year, ConocoPhillips gave Lance a pay increase of $798,000. Ryan Lance appeared in March on CNBC’s Squawk Box, decrying “burdensome regulations” and an “anti-business environment.”
Devon Energy
Devon Energy, a major oil company, had its “most profitable year ever in 2022,” the report points out. The company has 1,442 leases on 178,765 acres of public lands. In 2023, Devon Energy surpassed analysts’ expectations with a $3.75 billion profit and spent $2.1 billion on stock buybacks. It hasn’t yet published a CEO pay increase.
“I think demand numbers are pretty strong, pretty positive,” said Rick Muncrief, speaking on Bloomberg TV.
EOG Resources
The federal government penalized EOG Resources, a multinational oil company, for trespassing and improperly profiting from the sale of federal minerals. The company has 1,727 leases on 241,664 acres of public lands. Last year, EOG Resources made $7.59 billion and gave CEO Ezra Yacob a $1.9 million pay increase. It spent $1 billion on stock buybacks and $3.4 billion on dividends.
“EOG’s business has never been better, and our financial position has never been stronger,” said Chairman and Chief Executive Officer Ezra Yacob.
Occidental Petroleum
Occidental Petroleum is the largest onshore federal leaseholder by number of leases. It has 2,220 leases on 284,562 acres. The company made $4.69 billion in 2023 and gave its CEO a $2.7 million pay increase.
Vicki Hollub, CEO of Occidental Petroleum, thinks her company will transition to managing carbon. On NYSE’s Floor Talk, she said Occidental will become a “carbon management company.” She said that the company “will continue oil and gas production, but “with the aid of our chemicals group, we’ll also extract carbon out of the atmosphere for use in our EOR (enhanced oil recovery).” There is one problem. While carbon removal is possible (think planting trees), the issue is whether enough can be removed, according to the World Resources Institute.
Given the profits, power, and influence of the fossil fuel industry, its “anti-business” grievance concerning regulations for drilling on federal land rings a little hollow and predictable.
