Government waste of natural gas costing taxpayers millions

WASHINGTON -- Significant amounts of natural gas on federal lands are being wasted, costing taxpayers tens of millions of dollars each year and adding to harmful greenhouse gas emissions, a congressional investigation has found.

The nonpartisan Government Accountability Office also said the Bureau of Land Management failed to conduct production inspections for hundreds of high-priority oil and gas wells -- roughly 1 in 5 -- to ensure full payment of royalties to the U.S.

The report, obtained by The Associated Press before its public release, is the latest to highlight substantial gaps in oversight. An AP review of government records last May found the agency, which manages oil and gas development on federal and Indian lands, had been overwhelmed by a boom in a new drilling technique known as hydraulic fracturing, or fracking.

The GAO report said it had been urging BLM, an agency of the Interior Department, to update guidelines for the burning or venting of natural gas since at least 2010, when it found 40 percent of it could be captured economically and sold. BLM has yet to do so, although agency officials say they are putting together various orders and a proposed rule for comment later this year.

Until then, government investigators called BLM's management of oil and gas "high-risk" for waste and fraud.

Sen. Ron Wyden, D-Ore., joined Reps. Peter DeFazio, D-Ore., and Raul Grijalva, D-Ariz., the top Democrat on the House Committee on Natural Resources, in calling on the department to redouble efforts to stem waste, rather than give "drilling companies a pass to let millions of taxpayer dollars evaporate into thin air."

Companies that drill for natural gas pay the federal government a royalty on the gas they extract; they also are allowed to burn or release publicly owned gas from wells in certain amounts for free.

But GAO said BLM was underestimating the amount of gas vented and flared and failing to collect royalties for that gas. Based on data from the Environmental Protection Agency, the GAO calculated in 2010 the government was losing at least $23 million annually in lost sales.