Onshore Federal Lands Oil Production Rose in Recent Years

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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas)--Republican administrations have promoted "drill, baby, drill." Democrat administrations have promised to stop leasing on federal lands from day one of their presidency (see former President Joe Biden's debate in 2020). Yet in spite of official policy whipsawing, oil production from federal lands has risen fairly consistently, reaching an all-time high in 2024, according to a report by the U.S. Energy Information Administration (EIA).

That report, entitled "Onshore crude oil production on federal lands has increased in recent years," quotes data collected by the Department of the Interior (DOI) Office of Natural Resources Revenue (ONRR) as saying, "onshore crude oil production from federal lands reached 1.7 million barrels per day (b/d) in 2024, a record high."

ONRR numbers say that is about six times the production from federal lands recorded in 2008. In contrast, total U.S. production has only tripled since 2008.

The majority of growth came from federal lands on the New Mexico side of the Permian Basin, whose producing regions cross the Texas and New Mexico state line. EIA data show that New Mexico's production increases are due to rises in "leases, drilling permits approvals, and well bore starts," between 2020 and 2023. During the same period, overall lease activity in other federal lands dropped.

For natural gas, the EIA shows that permitting in New Mexico slowed somewhat in 2023 and 2024, but drilling has been on a steady rise there since 2016. Nationally, natural gas drilling on federal lands exploded between 2023 and 2024, rising from less than 2,000 new wellbores in 2023 to almost 4,000 in 2024. Differences in permitting and drilling numbers can come about by producers delaying drilling to wait for better prices or to prioritize other leases.

In New Mexico and the Permian in general, natural gas is normally a byproduct of oil production, with few specifically gas wells drilled. Nationally, as liquefied natural gas (LNG) exports have boosted demand and pricing, natural gas plays in the Marcellus, Haynesville, and elsewhere, have been home to most drilling activity for natural gas.

Will This Get Even Better?
Earlier this year, as covered here, the Department of the Interior (DOI) announced it was proposing new rules for the Bureau of Land Management (BLM), which manages federal leasing, which would streamline the application process. New rules "would make it easier for operators to combine production from multiple leases--a practice known as commingling."

On federal leases, mineral ownership can be complex, sometimes combining with tribal and private ownership. The prohibition on commingling was created to ensure that all leaseholders received appropriate royalties on complex ownership sites. New technology is one mover behind the rule changes, said the DOI. "Thanks to major advancements in metering and measurement technologies, operators can now accurately track production and allocate royalties even at the individual wellhead."

By opening the commingling door, the DOI will allow "oil and gas to be produced from different leases, often under different ownership, using the same well pad," which the department believes will reduce total production costs by possibly up to $1.8 billion per year.

It could also speed the permitting process, all of which could further increase drilling and production on federal lands.

While producers, including such entities as the American Exploration & Production Council (AXPC), are in favor of these changes, any actual benefit will be delayed. AXPC Chief Executive Officer Anne Bradbury said, "AXPC applauds Secretary Bergum and the Department of Interior for moving at lightning speed to unlock production efficiencies...." The law requires a period of public input, which can often take months, although the DOI and BLM have promised to expedite these changes as much as possible.

Operators taking advantage of this will also depend on oil prices, as many producers have already expressed concerns about President Trump's "drill baby, drill" enthusiasm. They have cited uncertain oil prices, tariff questions, and generally greater capital responsibility for reluctance to open the flood gates.

IIR's Vice President of Energy Services Jesus Davis said, "I expect that the rate of oil growth will slow as prices have moderated and are not incentivizing producers to grow production."

On July 25, Baker Hughes (Houston, Texas) announced that U.S. companies had reduced rig counts for the 12th time in 13 weeks. Specifically, oil rigs fell by seven while natural gas rigs increased by five. The total rig count was 542, down by 47 rigs (8%) from the same period in 2024.

Still, the easing of roadblocks could help the BLM land a greater percentage of what drilling does happen, which could lead to further increases in activity on federal lands.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).