Energy Analytics

Delaware Basin’s Evolving Federal Landscape


Since the Biden administration took office in January, the risk to oil and gas producers with assets on federally administered land has been a dynamic debate. On his first day in office, President Joe Biden issued an executive order temporarily banning new leasing and permit approvals on public land for a 60-day period while questions around climate impacts were addressed.

Nearly a month ago when the moratorium came to a close, the Department of the Interior announced the Bureau of Land Management (BLM) would resume processing new permits on existing federal leases, but new lease sales would continue to be withheld as the agency furthers a formal review of the program. If the BLM were to indefinitely freeze new leasing, oil and gas reserves under unleased federal land or leases that are not yet held by production (HBP) are at risk of becoming stranded (Figure 1).

Enverus quantified the portion of remaining drilling locations in the Delaware Basin exposed to federal land risk and contrasted with the impact previously implied by a potential complete ban on new drilling (Figure 2). A drilling ban would profoundly impact the play’s inventory life by inhibiting access to 46% of remaining locations in the Delaware. The current political landscape, however, indicates a much lower inventory risk — only 7% of Delaware inventory resides on BLM-administered land that is unleased or on leases classified as not HBP (more severe case). Moving leases that are not yet producing but show signs of near-term activity as indicated by the presence of permits, drilled or completed wells to the HBP bucket (less severe case), the portion of Delaware inventory at risk drops to 5%.

FIGURE 1 | Federal Land and BLM Leases Across New Mexico Delaware Basin

FIGURE 2 | Portion of Delaware Basin Inventory at Risk in Various Federal Land Policy Scenarios

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