Why One Small Change To Oil And Gas Commingling Reforms Matters For American Energy

A recent update to the US’s federal energy policy may be one of the most overlooked yet prove to be one of the most impactful changes in recent memory. Earlier this summer, on July 7, the U.S. Department of the Interior (DOI) proposed a policy change to federal energy permitting rules through the Bureau of Land Management, which would open the door to broader commingling of oil and gas production streams on federal land.

This article was written by Adam Ferrari  and originally published by The California Business Journal. 

For many outside of the oil and gas industry, this change may sound like a procedural footnote. However, for those of us who work within it, this update signals the start of a decisive shift in how the industry will manage risks, returns, and resources for years — if not decades.

As a chemical engineer and founder of an energy company operating across the western U.S., I see this policy change for what it is: a commonsense update that will support American energy efficiency reform without compromising oversight or accountability. If implemented correctly and carefully, it could enhance not only operational integrity but also environmental stewardship while saving the industry an annual approximation of $1.8 billion.

What is commingling, and why does it matter now?

In the oil and gas sector, the term “commingling,” as defined by the IADC Lexicon Project, refers to “production of oil and gas from more than one pool or zone through a common well-bore or flow line without separate measurement of the production from each pool or zone.” Producers operating on federal lands once faced restrictions that required production split by individual leases; however, this rule was established at a time when metering and digital tracking capabilities were far less sophisticated than they are today.

While that method may have worked previously, the digital oilfields of today have long since outgrown that approach. Today, we have access to tools like real-time monitoring, flow allocation algorithms, and volumetric precision that help us accurately track production, all without the need to segregate operations across different pads. If anything, commingling presents a massive opportunity because it expedites development timelines, mitigates surface disturbance, and eliminates the need for duplicative infrastructure.

Essentially, commingling is exactly the type of innovation that serves US interests, both economically and environmentally.

Efficiency that respects the long-term value of land and minerals

Still, as with any policy change, critics typically voice valid concerns. Commingling is no different. As far as private mineral owners should be concerned, the reform raises questions about transparency in royalty payments, access to key audits, and the allocation of data regarding production.

When done responsibly, commingling doesn’t disperse accountability. It’s a process that requires enhanced transparency. When coupled with the proper enforcement, commingling can lead to mineral owners receiving faster returns, supported by more concise and consolidated data. The caveat is that, to ensure fair ROIs for (and maintain trust from) mineral rights owners, it’s critical that we develop strong digital reporting systems and provide consistent federal oversight.

For operators, this new policy change will require marrying economic discipline with environmental sustainability. That means operators need to achieve the same efficiency with less concrete, fewer trucks, and smaller footprints.

I have firsthand experience seeing how policy changes can support agile operations to help ramp up development from conceptualization to revenue in a more rapid and sustainable way. I believe this change could make the difference between development slowing down or succeeding, especially in states where federal leases are more prominent.

Rebalancing industry production with efficient process changes

The new policy change from the US DOI is just one component in a broader pivot to the US’s federal energy policy and a more comprehensive reassessment of oil and gas regulation in the US, including federal energy permitting. The more pragmatic approach to permitting reform acknowledges the delicate balance of production requirements and operational effectiveness.

When we eliminate bottlenecks that no longer serve modern needs, we create space for new jobs, greater investments, and better environmental performance. More regulation isn’t the answer. It’s flexible and science-driven regulation derived from hands-on, real-world experience.

Stakeholder trust is integral

If the DOI’s new policy change is to succeed, all stakeholders must establish and agree upon a mutual foundation of trust. This requires the industry to adhere to consistent standards, establish auditable reporting, and maintain clear and transparent data.

Our technology is already where it needs to be. The only thing remaining is to implement it with integrity. For this new rule to be successful, it will depend on how thoroughly the government implements and enforces it. If it moves forward across federal leases without clear direction on how auditing or reporting processes are standardized, it could lead to inconsistencies that undermine its initial intention.

Bringing America one step closer to improved energy production

More drilling isn’t always the solution to progress in the energy sector. In fact, sometimes it requires capitalizing on what’s already present.

These changes from the DOI to the commingling rule exemplify how meaningful shifts in federal policy can preserve lands while saving money and reducing waste. When implemented properly, agile and flexible operations enable sustainability and profitability. Responsibility and efficiency are interdependent in today’s energy economy, and this policy change is a huge step forward we can take with precision and purpose.