The U.S. Government Accountability Office (GAO) has issued a report criticizing the Bureau of Land Management (BLM) for failing to consistently implement policies for overseeing potential liabilities related to oil and gas leases on federal lands. Prepared for the Senate Committee on Energy and Natural Resources, the report found that many BLM offices do not follow current policies that cover agency reviews of the bonds that oil and gas operators must provide before beginning drilling operations and managing idle and orphan wells.
Under GAO policy, field offices are supposed to periodically or regularly review bonds when certain events occur, and increase the bond amount as necessary to reflect the appropriate level of risk. According to the report, about 19,000 of the 93,000 wells on federal land in fiscal year 2010 were drilled within the past five years. Thirty-three of 48 BLM field offices manage the agency’s oil and natural gas program and fall within the jurisdiction of 10 state offices.
According to GAO, 13 of the 33 BLM field offices reported that, for fiscal years 2005 through 2009, they either failed to conduct reviews or did not know the number of reviews conducted. The report also documents that state offices did not consistently follow policies on when to increase bond amounts. The report recommends (i) increasing regulatory minimum bonding amounts over time to better ensure operator compliance, (ii) revising the policy for bond adequacy reviews to better define terms and conditions that lead to an increase, (iii) improving the completeness and consistency of well records, and (iv) improve monitoring of agency performance on reviewing bond adequacy and idle wells.