Prelude to a Cutback of Oil and Gas Development on Public Lands?
The Obama administration issued a report this week highlighting a surplus of unused oil and gas leases on public lands, in an ominous sign that it might be laying out a case to eventually cut back on acreage open for development.
The White House forwarded the Department of Interior report to its press list, stating that more than two-thirds of federal offshore acreage leased by industry and more than half of federal onshore leased acreage in the lower 48 states remains idle without active production or exploration activity.
“As part of the Obama administration’s all of the above energy strategy, we continue to make millions of acres of public lands available for safe and responsible domestic energy production on public lands and in federal waters,” said Interior Secretary Ken Salazar. “We continue to offer new areas onshore and offshore for leasing, as we have over the last three years, and we also want companies to develop the tens of millions of acres they’ve already leased but have left sitting idle in order to further reduce our reliance on foreign oil as quickly as possible.”
The Interior Department said its finding were consistent with President Obama's "Blueprint for a Secure Energy Future."
It said that out of nearly 36 million acres leased offshore, only about 10 million acres are active. In the lower 48 states, an additional 20.8 million acres, or 56 percent of onshore leased acres, remain idle. Approximately 7,000 approved permits for drilling on federal and Indian lands have not yet been drilled by companies, Interior said.
While the administration publicly balks about unused leases, many point to industry being scared away from developing on public lands by increasing bureaucracy and stifling regulations.
“These Interior claims are repackaged liberal talking points that just shows they don’t understand how the economy works when it comes to energy production," Sen. David Vitter (R-La.) told PJM. "Often because of Interior regulations, these lands sit ‘idle’ and paying into the Treasury until they can move forward."
The report also comes on the heels of the administration taking heat over the Keystone XL pipeline controversy and an EPA administrator's now infamous remark that oil and gas companies should be regulated a la Roman crucifixions.
The latest Interior Department regulations, putting new oversight, reporting and permitting requirements in place for hydraulic fracturing, or "fracking," on public lands were announced just two weeks ago.
The administration followed the Interior report with an announcement today that it is moving forward with the Gulf of Mexico oil and gas lease sale announced by Obama in January, in which more than 38 million acres will be offered.
“As part of the Obama administration’s all of the above energy strategy, we continue to make millions of acres of federal waters and public lands available for safe and responsible domestic energy exploration and development,” Salazar redundantly said today. “Holding this lease sale is one of the many administrative steps we are taking, at the president’s direction, to increase U.S. production, reduce dependence on foreign oil, and incentivize early production on leases that industry holds.”
Oil exploration on lands controlled by the government plummeted by 14 percent from 2010 to 2011. The gains in oil production over the past eight years that Obama regularly touts were on private and state lands.
"Unfortunately, your Administration’s proposed offshore oil and natural gas leasing plan for 2012 to 2017 eliminates 50 percent of lease sales provided for in the previous plan, opens less than three percent of offshore areas to energy production, and imposes a moratorium on developing energy from 14 billion barrels of oil and 55 trillion cubic feet of natural gas in the Atlantic and Pacific oceans," Sen. John Cornyn (R-Texas) and other Senate Republicans wrote Obama at the end of February. "The moratorium on exploration in the Gulf of Mexico, and persistent delays for permits in shallow and deep water leases, could result in a 19 percent decrease in production in 2012 compared to 2010, according to an Energy Information Administration projection."
"The oil rig count in the U.S. was 1,293 at the beginning of March 2012, the highest number in 25 years," the Senate Republican Policy Committee said in a March release. "But again, President Obama’s policies are not responsible as production increases have taken place on state and private, not federal, lands. A sample of federal lands shows offshore oil rigs in the U.S. have declined from 124 a year ago to 115 today.
"In fiscal years 2009, 2010, and 2011, the total number of acres of leased onshore public lands decreased from 45.4 million acres to 38.5 million acres. Even with more than five million new acres, the president’s administration leased during the first three fiscal years, the president has presided over a 15 percent reduction in total leased onshore public land."
Legislation in Congress that attempts to make it easier for production to move forward is predictably stalled in the Senate. The Jobs and Energy Permitting Act of 2011 -- which would streamline the EPA’s decision-making process for air permits, which is delaying energy exploration in the Alaskan Outer-Continental Shelf -- is delayed in the upper chamber after passing in the House last June. It is one of several energy-related House GOP bills rolled into the Western Economic Security Today (WEST) Act, introduced by Sens. Orrin Hatch (R-Utah) and John Barrasso (R-Wyo.) last month.
Today, the House Natural Resources Committee passed the Natural Strategic and Critical Minerals Protection Act and the Native American Energy Act, which aim to reduce burdensome government hurdles and streamline duplicative and unnecessary bureaucratic obstacles to onshore American energy and mineral production while encouraging job creation and economic growth, say its sponsors.
"Due to restrictive and cumbersome federal regulations, many tribes have been unable to harness their own energy resources," said Natural Resources Committee Chairman Doc Hastings (R-Wash.). "The Native American Energy Act allows tribes more control over their land by streamlining government barriers to energy production.”
Indian and Alaska Native Affairs Subcommittee Chairman Don Young (R-Alaska) said that every provision of the bill was requested by Indian tribes or Alaska Native Corporation leaders in a bid to remove the red tape "that stands between them and timely, efficient production of energy resources."
Touting reformed leasing procedures that are more "environmentally sound," the Interior Department noted that its report came the same day as the Bureau of Land Management's call for nominations and comments on available tracts to be considered for its scheduled November 2012 oil and gas lease sale in the National Petroleum Reserve in Alaska.
“These lands and waters belong to the American people, and they expect those energy supplies to be developed in a timely and responsible manner and with a fair return to taxpayers,” said Salazar. “We will continue to encourage companies to diligently bring production online quickly and safely on public lands already under lease.”
But will their clarion call -- as producers would like to get cracking but are knee-deep in onerous regs -- be the prelude to a cutback of available oil and gas land?