Salazar Report Refutes GOP Claim Administration is Blocking Oil and Gas Drilling
Secretary of the Interior Ken Salazar has released a report requested by President Obama showing that two-thirds of all offshore oil and gas leases in the Gulf of Mexico and half of all onshore leases on federal lands are not currently being used by the energy companies that purchased the leases.
By David A. Hill
In fact, the report reveals, the companies not only aren’t producing any oil and gas on the leases, they also aren’t currently conducting any exploration. The report is part of the administration’s attempt to counteract Republican accusations that Salazar has implemented too many environmental restrictions on domestic oil and gas drilling and is costing the country jobs.
Overall, the Salazar report found that about 45 percent of all onshore leases and 57 percent of all leased acres are idle. Of the more than 38 million leased onshore acres, nearly 22 million acres are not being used. The Department of Interior is considering “policy options to provide companies with additional incentives for more rapid development of oil and gas resources.”
“We continue to support safe and responsible domestic energy production, and as this report shows, millions of acres that have already been leased to industry for oil and gas production sit idle,” Salazar said in a release.
“These are resources that belong to the American people, and they expect those supplies to be developed in a timely and responsible manner and with a fair return to taxpayers. As we continue to offer new areas onshore and offshore for leasing, as we have done over the last two years, we will also be exploring ways to provide incentives to companies to bring production online quickly and safely.”
In Colorado and Utah, states with between 1 million and 5 million federal lease acres, only 32 percent and 22 percent of those acres, respectively, are currently being used for oil and gas production. In Wyoming and New Mexico, both states with more than 5 million federal lease acres, only 33 percent and 69 percent of those acres, respectively, are being used for oil and gas production.
Denver-based Matt Garrington, deputy director of the Checks & Balances Project, said in a release that “it’s time to clear up the muddy waters around the drilling debate, and today’s report by the Obama administration does just that. The simple truth is approval rates for drilling permits are up, and industry lays idle hands on over 21 million acres of public lands.
Despite Libya’s conflict, unrest throughout the Middle East and increasing energy demands of countries like China and India, Republicans continue to fault the White House for rising energy costs. In his weekly newsletter last Sunday, Colorado Congressman Cory Gardner repeated the refrain.
“As is the case with jobs and the economy, Washington is a big part of the problem when it comes to the cost of energy,” Gardner said. “Over the last two years, the Obama administration has consistently blocked American energy production that would lower costs and create jobs.”
“It has imposed a de facto moratorium on drilling in this country, and it tried to pass a national cap-and-trade tax on energy. The result of the administration’s freeze on energy production at home is that gas is on its way to $4 a gallon and unemployment remains high.”
Gardner has joined fellow House Republicans in trying to significantly reduce the regulatory authority of the U.S. Environmental Protection Agency as well as block Salazar’s Wild Lands proposal for identifying and designating appropriate BLM lands for wilderness protection.
Filed Under: ARCHIVES • Feature Articles • Oil & Gas • Policy
Tags: BLM • cap-and-trade • Ken Salazar • oil and gas leases • Rep Cory Gardner • U.S. Department of Interior
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Comment by cogeo on 31 March 2011:
“Mr. Salazar, please release a report that says American oil and gas interests are stalling and we are not slowing down the permitting process.—Barry, from Brazil” Seriously, the facts are not in any report a politician creates; a report can be just as wrong as the words these people speak just in a different format. That report is simply a political tool for idiots. The facts lie in how many rigs are now in the GOM and how many permits are issued; not many and very few, respectively.
The fact that the industry is not drilling on every acre does not mean the industry is holding back; if the author would take a quick look at the price of oil he would surmise that there is no reason NOT to drill where there is oil. The facts are that on many of the leases, companies must lease junk acreage where no oil accumulations lie.
From the standpoint of the oil and gas industry who have paid out billions for leases that will not receive impartial review and timely up/down approval, it is a hopeful investment and gamble that the money the government is holding (rather, spending madly) will someday result in the permission to drill and have a 10% chance of being economically producible someday.
If the author believes what this administration is broadcasting, he should do a quick search on what it takes to move a lease from purchase to production, and then get back to me.
Comment by VCubed on 31 March 2011:
cogeo, you must work for the industry. Hope you’re paid well to post such nonsense. There are facts, and there are opinions, and yours are opinions based on mere dislike/hatred of Obama. Lefties are sick of O for being such a corporate servant, and you teabaggers keep demanding we give corporations more rights than people have. You want corporations to have more? Give them YOUR money and rights.
Comment by Paul Power on 31 March 2011:
Our government opens up federal onshore lands for mineral leasing for oil & gas.Coloado rules make it difficult with out a doubt,when it comes to drilling.But Coloado loves to put up federal lands for lease auctions!!Record high leases are paid by oil companies from 1,000 to 4,000 thousand dollars per net acre!!!Wow does that make colorado all soooo happy!!! This keeps Colorado schools going,and keeps Colorado safe from Deficit.Colorado even states how the oil & gas industrie has saved the state!!So why make it so hard to drlll the federal lands that you lease to oil & gas companies in Coloado?? I do have to say,Wyoming is no better!!Oil companies are doing their part to get America back up in running with oil exploration & production!! Now its Colorados turn to do the right thing!! Colorado loves the money they recieve from oil!!So Colorado,if you like to take!Now its time for you to give…Can you do that?? Thank you, Paul Power
Comment by cogeo on 3 April 2011:
@Vcubed: Geez, where to start! I do work with the industry, they don’t pay me to post this, whoever they might be. At last check, this site is an “energy” site, so my opinions and facts are valid. I work primarily in the natural gas sector; what the eco-minded used to call clean burning. But nonsense? Hardly, the administration can say what he likes about permitting and activity, but the folks in the GOM will say the moratorium hurt our production of oil, and permitting continues to proceed at a slow pace. I’ve recently learned that the administration is not against oil or drilling for oil in deep water; just oil companies who fill their ranks with Americans and attempt to drill off American shores. Here in Colorado our industry is fairly robust, hence I get paid a lot (sorry). Hatred/dislike of Obama, well, having read a lot of history and learned a lot of hard lessons at the hands of progressive, I can honestly say I am no fan of progressivism past, present, or future, but I’d probably drink a beer with the guy just to pick his brain. I’ll leave the obvious hating to you, but don’t think I am a teabagger and try not to use that term in public where a Tea Party member may be bigger than you. I believe in less government, less coddling of industry by government, more power in the people’s hands, and an executive branch of government which respects the constitution and the people it represents. And, I prefer to keep my money and not scatter it around in the form of exhorbitant taxes. But I digress, and so did you. Toodles!
Comment by Jeremy Boak on 4 April 2011:
When I analyzed onshore leasing data from 1997-2004, I found that
1) In 1997 BLM showed 20,086 producing leases (10,514,920 acres) and 28,001 non-producing leases (24,758,257 acres)
2) In 2004, BLM showed 21,891 producing leases (11,671,414 acres and 23,945 non-producing leases (23,775,030 acres)
3) Between 1997 and 2004, BLM had awarded 24,665 new leases (26,352,518 acres).
Therefore, industry had evaluated and converted at least 1805 leases (1,156,494 acres) to producing leases (even if no producing leases reached the end of their productive life and were abandoned). In addition, the total of leases converted/dropped/expired was 27,673 (24,758,257 acres). During the interval, BLM recorded 20,719 wells started and 20,562 completed (16,282 completed and 4,280 abandoned).
It seems to me that this level of turnover in leases suggests that evaluation is going on (with drilling and production or abandonment as only the last steps in this process), that lease payments are not being wasted just sitting on leases, and that the current working interval (lease term) may be about right to give companies time to evaluate, prioritize, and investigate the properties they have leased.
It would be valuable to have data on the wells drilled, to see how many leases actually made it to this point. Clearly, less than one well was drilled per lease, but that can not be demonstrated to be due to no action on the lease. However, the one BLM person I spoke to about getting additional data told me that the BLM staff were stretched thin enough with all their other duties, and found it challenging to even keep the available data current.
The full discussion is available from me by request (jboak@mines.edu). I would be interested in updating this analysis to the latest data, but do not have funding to do so.
Jeremy Boak, Director
Center for Oil Shale Technology and Research
Colorado School of Mines
Comment by admin on 4 April 2011:
Thanks for the information Jeremy.
Comment by Ben E Voivedich Jr. on 8 April 2011:
The headline of this article and the content discuss two DIFFERENT issues but blend them together to support the Obama position of the day on oil and gas. How and why oil companies bid for LEASES and choose to explore some and not others has NOTHING to do with the snail’s pace at which DRILLING permits are being issued. Just assume that all leases now held were being actively worked and required a drilling permit..does anyone really believe that the Obama administration would move FASTER to approve them? For the CEN editors and the writer of this article to carry the water for Salazar making the case that Obama and his progressive/liberal minions are somehow for more drililng if only the oil companies would work the leases is disingenuous. But any opportunity to take a shot at Republicans and the oil/gas industry you claim to serve and report on is not to be missed, right?
Comment by admin on 8 April 2011:
Actually, we think our coverage of the oil and gas industry is pretty even-handed, and followed up the article you criticize with another post that addresses some of the same points you do: http://coloradoenergynews.com/2011/04/oil-industry-battles-claims-that-leases-are-languishing/
We don’t agree with everything Salazar and the Obama administration do in this area, for sure, but we also don’t buy every “company line” from the industry. Your phrase of … ‘Obama and his progressive/liberal minions’ … tells us all we need to know about where you’re coming from.