Is an anonymous energy company actually a front for a conservation group? I hope so!

An article on federal oil and gas auctions by Natasha Geiling at ThinkProgress caught my eye.

The ThinkProgress story mostly is concerned that quasi-anonymous companies can secure oil and gas leasing rights on federal land, and anonymity might make it harder to enforce regulatory protections and lead to environmental problems. The object of her concern is Ayers Energy, LLC, which recently acquired several development leases in southeastern Utah.

But, as Geiling suggested, while is it likely Ayers is fronting for a larger oil company or investing entity, it is also possible that Ayers is fronting for a conservation group. That is to say, perhaps the regulatory provisions Ayers wants to evade are the “intent to drill” requirement imposed on leaseholders. Anonymity might be helping avoid oil and gas development on nearly 30,000 acres of federal land near the Hovenweep National Monument.

Now that would be an interesting development!

Along with Shawn Regan at the Property and Environment Research Center, I have long advocated the idea that conservation groups be allowed to bid on and hold federal oil and gas development leases. The idea is that such bidding offers an open, non-politicized way for people to protect specific sites on federal land from oil and gas development that would harm conservation interests. There was some hope that the approach would be tried two years ago when conservationist-author Terry Tempest Williams secured two federal leases after a BLM auction. The BLM ultimately denied the lease agreements on the grounds that the leaseholder had indicated an unwillingness to develop the resource.

Ayers could have the same intent as Williams, but wishes to disguise itself as much as possible to avoid having to explicitly declare intentions to BLM. Technically speaking, by entering into the leasing agreement Ayers has already indicated an intent to develop energy resources. So long as BLM believes Ayers has that intent, Ayers-the-hypothetical-conservation-front can hold the leases without actually developing.

The company just needs to stay out of headlines, pay auction fees, and keep up annual rental payments, and it could potentially hold the property out of development for ten years. In return, U.S. citizens benefit from the million dollars or so of payments the company would make to hold onto the leases. (And if Ayers wanted to extend the lease beyond ten years, some clever legal and regulatory maneuvering might do the trick so long as they keep themselves out of the headlines.)

For more background on this and related issues see the following Knowledge Problem posts: one, two, three, four, and five.

Of course, Ayers probably is just the agent or arm of an oil and gas development company. And that’s fine by me, just not so interesting to speculate about.

ADDED: More from the Salt Lake Tribune.

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3 thoughts on “Is an anonymous energy company actually a front for a conservation group? I hope so!

  1. I think what you are missing is that fossil fuel production is a national security issue. One that the Federal government needs to consider in all of its decisions.

    Many people think that Russia is one of the US’s top strategic problems. Russia is dependent on fossil fuel exports to fund its military and their adventures in Ukraine and Syria. One way of cabinning Putin’s adventurism is to keep the price of fossil fuels down and to provide Europe with secure knowledge that their economies are not Putin’s hostages.

    One of the largest sources of strategic problem to the US is the Middle East. The only reason why the US continues to be involved in that hellhole is that the Persian gulf is the source of much of the world’s tradable fossil fuel. Pouring money into medieval tribal societies begot terrorism and endemic warfare. The less money the states of that region have, the less mischief they can make.

    The strategic benefits of domestic US fossil fuel production are so manifest that its opponents can only be dupes or paid agents of the Russians and Arabs. The US must follow a policy of maximizing fossil fuel production. Leasing Federal lands is only one step. But it should pursued vigorously.

    Allowing “conservationists” and “environmentalists” to subvert the process is giving aid and comfort to our enemies.

  2. Here is why I’m not too worried about the national security implications of this action (and assuming that this is a conservationist effort to withhold resources from development).

    First, the lease can be maintained only for 10 years undeveloped, unless the group goes to extraordinary efforts to continue them. Second, any oil and gas resources contained in the area remain in the ground and potentially developable. Third, there are plenty of resources on federal, state, and private lands currently being developed. Price is currently a bigger barrier to development than environmentalist desires to “keep it in the ground.” And finally, in the case of an actual emergency requiring more energy development, leased but undeveloped resources could have the leases taken back and re-opened for bidding.

    I suspect that there is more oil off the Florida coast that the Trump administration was willing to pull out of leasing altogether as a political gift to the governor-wanting-to-be-senator–and Florida is not paying U.S. taxpayers for the withholding of development of federal resources. If national security is an issue, the Trump administration should first undo that political maneuver.

  3. 2. points. Quickly. i am not indulgent of ‘conservationists”. I do not think they are harmless cranks who should be tolerated.

    If leases contain representations that the lessee will develop the well, there is a big problem for “conservationist”. It is a felony to make false statements to the federal Government. Just ask Martha Stewart what happens if you do.

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