Report shows that energy companies are not maximizing production and exploration in areas already under lease
By Bob Berwyn
SUMMIT COUNTY — Illustrating some of the vexing questions associated with energy development on public lands, the Obama administration this week released a report that details how oil and gas companies aren’t developing the leases, and at the same time, offered new leases for oil shale research and development and details on new offshore drilling leases in the Gulf of Mexico.
It’s probably not surprising that the administration is trying to straddle the fence. Despite the fact that domestic oil and gas production are near or at record highs, President Obama is facing a constant barrage of politically motivated criticism directed at his energy policies that cynically use high gas prices as a clumsy and well-worn political weapon.
“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,” Salazar said in a prepared statement.
“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. We will continue to encourage companies to diligently bring production online quickly and safely on public lands already under lease,” he said.
Arguments by Republican critics that Obama isn’t leasing enough areas are transparently inaccurate, based on a quick overview of the numbers in the report:
In 2011 the Interior Department offered about 21 million offshore acres for oil and gas
development. In June more than 38 million acres of offshore oil leases in the central Gulf of Mexico will be on the auction block, holding an estimated 31 billion barrels of oil and 134 trillion cubic feet of natural gas. Onshore, the Department offered 1.2 million acres for lease in 2011, as well as an additional 3 million acres in the first quarter of 2012.
So how much of the acreage currently under lease have the oil companies developed?
In the Gulf of Mexico, 32 million acres are under lease, but only about 10 million acres have approved exploration or development plans, and only 6.4 million of these acres are in production.
Leased areas in the Gulf of Mexico that are not producing or not subject to pending or approved exploration and development plans hold about 18 billion barrels of oil and almost 50 trillion cubic feet of natural gas.
At the end of 2011, more than half the onshore areas under lease — about 56 percent — are not being developed or even explored for resources. As of September 30, 2011, there were more than 7,000 approved permits to drill on public and Indian lands that have not yet been acted on by companies.
In the twelve months ending April 19, 2012, 67 deepwater drilling permits were issued — only three fewer than during the 12 months preceding the Deepwater Horizon disaster.
That may not please environmental groups, who aren’t convinced that new policies adequately ensure environmental protection, but it’s understandable why the administration is spelling out those numbers, given the political heat in Washington.