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Small independent oil producers tell committee bond, methane and injection rules threaten operations
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Summary
Patrick Montalban, representing small independent oil producers, told the House Small Business Committee that recent changes in bonding and EPA rules — including methane reporting and underground injection control requirements — have raised costs and delayed permits, limiting transactions on federal lands and harming rural jobs.
Patrick Montalban, who identified himself as chairman and chief executive officer of Montauban Oil and Gas Operations Inc. and chairman of the National Stripper Well Association, told the House Committee on Small Business that small, independent oil producers ("mom-and-pop" wells) face layered federal and state regulation that has intensified under recent rulemaking.
Montalban said small producers supply a meaningful share of U.S. output and rural employment, and he described three regulatory changes he said were most harmful: methane rules that added reporting and monitoring obligations; a change in Bureau of Land Management bonding that increased single-well bonds from $10,000 to $150,000 and multiple-well bonds from $25,000 to $500,000; and problems with the EPA’s Underground Injection Control (UIC) program that have delayed permits to inject produced water. “They took a single well bond for $10,000 to … $150,000 … What this clearly did was take us out of operating on small, federal lands,” Montalban said.
He told members he and other small operators experienced delayed permits for drilling and injection and that agency communications were often absent: “We've had numerous situations … why permitting, permits to drill, permits to inject water have not gone through the process, and we've never heard back.”
Why it matters: Montalban said the bond increases and new reporting requirements make surety bonding unaffordable for small operators and restrict the sale and purchase of federal leases, with cascading effects for local royalty owners and rural economies. He testified that small independents often pay higher labor rates and provide community support: “We have 17 full employees and pay $35 an hour. We pay a % of health care for our employees and their families.”
Committee exchange: Members from both parties raised the regulatory impact on energy jobs and local economies. Representative Downing (Montana) and other members pressed Montalban for examples and urged the committee to examine BLM and EPA processes; Montalban cited one Montana lessee who sought more time to consult partners but was denied.
Limits and evidence: The committee record captures Montalban’s account and figures he cited on bond amounts and production shares; the hearing did not include agency officials to confirm procedural justifications or the administrative record.
Ending: Members signaled interest in further oversight of the BLM and EPA rule changes and how the Regulatory Flexibility Act and related processes addressed (or failed to address) impacts on small energy producers.
