U.S. Proposes Rule Changes to Boost Oil and Gas Output in the West

In a move that could significantly ramp up fossil fuel production, the U.S. Interior Department on Monday proposed regulatory changes aimed at streamlining oil and gas drilling operations across the American West. The proposed rules would ease current restrictions on "commingling", the practice of combining output from multiple leases on a single well pad, potentially saving the energy industry up to $1.8 billion annually.

The current regulations from the Bureau of Land Management (BLM) only allow commingling when leases share identical mineral ownership, royalty rates, and revenue distribution structures. This has presented major challenges in the western U.S., where mineral rights and ownership are often highly complex and fragmented.

The Interior Department stated that its proposal would modernize outdated rules, improve operational efficiency, and allow for more accurate tracking of fossil fuel production, royalty payments, and revenue distributions to both the federal government and tribal nations.

Interior Secretary Doug Burgum emphasized that the changes are long overdue. “The current rules were written for a different era,” he said. “These updates will help us manage public resources more efficiently, support responsible energy production, and make sure taxpayers and tribes get every dollar they’re owed.”

The proposal aligns with directives from former President Donald Trump’s tax reform law, which called for streamlined approval of commingling applications as part of the administration's broader “energy dominance” agenda. The Western Energy Alliance has strongly backed these changes, citing commingling as a fast-track solution to boost onshore production that has often been stalled by regulatory delays.

While the U.S. remains the world’s leading oil and gas producer, this latest policy shift signals continued federal efforts to remove regulatory barriers and accelerate fossil fuel development despite growing environmental concerns and global climate commitments.

Regulatory acceleration of onshore O&G production shifts the near-term supply picture without changing the long-horizon transition-risk exposure - insurance appetite, lender pricing and TCFD-aligned scenarios all still point the same way. Our sustainability-due-diligence and climate-action teams help producers and their financiers keep disclosure narratives coherent across that gap.