Feds Mull New Oil and Gas Drilling Across Southwest Lands
The Bureau of Land Management is soliciting public input on proposed oil and gas drilling expansion in Arizona and Nevada ahead of federal lease sale, the agency said in a press release Tuesday.
The federal land manager opened a 30-day public comment period on plans to offer 40 parcels totaling 78,708 acres in northwestern Arizona and 14 tracts covering 20,600 acres in northeastern Nevada for future oil and gas leasing, with environmental scoping work on the parcels already underway.
“Arizona remains an important oil and gas state in our administration’s priority on strengthening American energy production,” said BLM Acting Director Bill Groffy. “This lease sale, which will be the first to be held in Arizona since 2018, will extend our streak of successful oil and gas lease actions under the One Big Beautiful Bill Act.”
The announcement has garnered criticism from industry experts, according to local reporting outlets.
“I’m perplexed by this,” said Northern Arizona University seismologist and geophysicist professor Ryan Porter. “There have been lots of wells drilled up there and there’s not an oil field up there now, which means they probably didn’t find anything.”
Without any in-state oil refineries for local production, Arizona is left to rely on California for roughly 33% of its gasoline supply with the remaining 50% to 70% coming from Texas and New Mexico.
The U.S. Department of Energy highlighted the state’s vulnerabilities in a May 2019 report.
“According to the U.S. Energy Information Administration (EIA), Arizona has no proved oil reserves nor natural gas reserves,” DOE stated in its release. “According to interviews with the AOGCC (Arizona Oil and Gas Conservation Commission), all current oil and gas production originates from the Navajo Nation, in the northeastern region of the state.”
The DOE also added that the federal land agency is also responsible for regulating Arizona’s current oil and gas production.
“In general, the geology of Nevada through southern Arizona is just not very conducive to producing recoverable hydrocarbons,” Porter told The Republic. “As far as I’m aware, there’s nothing worth drilling for in that part of the state.”
The deadline to submit comments on the proposed Arizona December 2026 lease offering ends June 11.
The BLM completed scoping for the Northeastern Nevada parcels in March and is now accepting public comment through June 11 for the proposed September oil and gas lease sale.
The Tuesday announcement comes less than a month after the agency opened public comment for an additional four parcels totaling 10,211 acres for federal drilling development last month, OPIS previously reported.
The public comment period for those tracts will close on May 24.
Nevada is also heavily reliant on imports to supply the state’s fuel consumption, leaning on California to fulfill roughly 90% of its demand.
Sky Quarry owns and operates Nevada’s sole 5,000 b/d refinery and voiced interest in securing additional crude oil last month, seeking drilling opportunities to ramp up local production.
If leases are awarded, operators must submit a permit application to drill and development plans to BLM for review. Permit applications will later be made available to the public as the agency conducts environmental analysis and coordinates with state partners and stakeholders.
Any crude produced will be integrated into the U.S. fuel system and likely flow to regional markets rather than remaining within Nevada’s borders given the southwestern states’ limited refining capacity, according to BLM.
Kinder Morgan and Phillips 66 announced a partnership on the proposed refined products Western Gateway pipeline, connecting Midwest and Gulf Coast refinery supply to the Arizona and California fuel markets.
Connectivity to Las Vegas will be through the existing Kinder Morgan CalNev Pipeline, according to company statements. The Phillips 66 Gold Pipeline that flows from Borger to St. Louis will be reversed. The Kinder Morgan SFPP pipeline from Colton, Calif., to Phoenix will be reversed, providing flow from east to west. Refineries in the Midwest and Gulf Coast will feed into a new-build pipeline from Borger, Texas, to Phoenix.
Western Gateway aims to supply 200,000 b/d of Midwest-sourced refined products into Arizona. This would replace the 125,000 b/d Phoenix currently receives via the Kinder Morgan SFPP line from California.
The targeted in-service date for the project is mid-2029, OPIS previously reported.
Reporting by Sydnee Novak, sbeach@opisnet.com; Editing by Andrew Atwal, aatwal@opisnet.com