U.S. Interior Proposes Easing Rules for Commingled Oil and Gas Production Across Leases

The U.S. Interior Department on July 7 proposed key updates to Bureau of Land Management (BLM) oil and gas regulations aimed at streamlining the process for operators to commingle production from multiple leases. These changes would carry out the One Big Beautiful Bill’s directive for the department to approve onshore commingling applications. Producing oil and gas from multiple leases—often under separate ownership—on a single well pad helps minimize environmental impact, reduce operational expenses, and enhance efficiency.

The One Big Beautiful Bill, signed into law on July 4, scales back Inflation Reduction Act clean energy incentives and fast-tracks fossil fuel development on public lands and waters. The measure marks the most significant federal energy policy realignment in years. The bill aggressively prioritizes fossil fuel production by reopening federal leasing programs for oil, gas, and coal, including onshore and offshore tracts. It lowers royalty rates for methane produced from federal leases, relaxes permitting for conventional energy infrastructure, and authorizes a new federal financing program to back large-scale fossil fuel projects.

Existing BLM regulations limit commingling to leases with identical mineral ownership, royalty structures, and revenue distribution. These restrictions pose unnecessary challenges in many Western regions where mineral ownership is often diverse and complex. The proposed revisions would permit commingling even when these factors differ, helping to unlock energy resources currently constrained by regulatory hurdles.

If adopted, the revised rules could generate up to $1.8 billion in annual savings for the industry. These cost reductions would enable operators to reinvest in new energy projects, supporting domestic energy growth while minimizing the need for redundant infrastructure. The rule would also provide greater flexibility in how production is combined and measured—boosting efficiency and reducing surface disturbance, with benefits for both the industry and the environment.

The proposed rule aligns with recent directives from the Trump administration and the department to reduce regulatory burdens, encourage energy development, and update outdated policies.