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Obama challenges oil companies to drill existing leases
Fuel Fix ^ | May 15, 2012 | Jennifer A. Dlouhy

Posted on 05/16/2012 5:23:43 AM PDT by thackney

The White House on Tuesday pushed back against the oil and gas industry’s claims that the Obama administration is blocking domestic energy development, releasing a new analysis showing that 46 million acres of federal lands and waters leased for drilling are sitting idle.

According to the Department of Interior report, oil and gas companies are actively drilling or have launched development on less than a third of the 36 million acres they have leased offshore, and on just over half of their onshore leases.

That includes leases where the companies have not yet filed exploration and development plans with the federal government, and ones where companies have received drilling permits but haven’t launched the work. According to the report, the government has issued about 7,000 permits for exploration not yet under way on federal and Indian lands.

The Interior Department analysis, which updates an assessment issued last year, comes as industry leaders accuse the Obama administration of walling off access to domestic energy resources. In particular, industry leaders and their congressional allies complain about the Interior Department’s decision not to sell drilling leases in the Atlantic and Pacific oceans over the next five years.

With gasoline prices and the economy looming large at the ballot box this year, the administration has been emphasizing its commitment to an “all of the above” energy policy and especially touting its support for domestic natural gas production.

Administration officials said the report underscores the White House’s commitment to allowing oil and gas drilling on federal lands and waters.

“We continue to make millions of acres … available for safe and responsible domestic energy production on public lands and in federal waters,” said Interior Secretary Ken Salazar in a statement. “We also want companies to develop the tens of millions of acres they’ve already leased but have left sitting idle.”

But industry leaders argue that the administration’s numbers don’t reflect the sometimes-long lead times between buying leases and winning federal regulators’ approval to drill on those tracts, or the time needed to assess leases geologically before launching exploration.

‘Election-year politics’

American Petroleum Institute President Jack Gerard dismissed the report as “election-year politics” and said it was “absurd to contend the industry pays the government billions of dollars every year in bonus bids and rents to leave land idle.”

On the contrary, Gerard insisted, oil and gas companies develop leases as expeditiously as they can.

“The industry last year alone invested $200 billion in the United States,” Gerard said. “So we’re hardly sitting on anything. We’re waiting for Uncle Sam to give us permission to produce these resources.”

Industry representatives also argue that it takes time for companies to conduct technical research and plan for drilling – generally without any guarantee that they will find oil and gas.

Kathleen Sgamma, vice president of government and public affairs at the Western Energy Alliance, said the administration was trying “to deflect blame for leases that are not producing onto the industry.”

Sgamma said the alliance estimates that about half of non-production on onshore acres results from “redundant regulations and bureaucratic delays,” not industry disinterest.

‘Use it or lose it’

Some congressional Democrats have argued that the onus is on the industry to develop their existing holdings. They have proposed “use it or lose it” fees for undeveloped leases that would be paid on top of existing rental rates.

In a bid to spur development, the Interior Department already has boosted annual rental rates for offshore acres that are leased but haven’t started producing oil. The government also has shortened the leasing times for initial drilling in some shallower water depths and hiked the minimum bid for some offshore tracts from $37.50 to $100 per acre.

Separately Tuesday, the Interior Department’s Bureau of Land Management kicked off the formal planning for a November lease sale in Alaska’s National Petroleum Reserve, when it asked energy companies and other stakeholders to say what parts of the region – if any – should be auctioned for drilling.

As many as 630 tracts covering 7.1 million acres in the reserve could be up for grabs.


TOPICS: News/Current Events
KEYWORDS: energy; naturalgas; oil
about half of non-production on onshore acres results from “redundant regulations and bureaucratic delays"

- - - -

“The industry last year alone invested $200 billion in the United States,” Gerard said. “So we’re hardly sitting on anything. We’re waiting for Uncle Sam to give us permission to produce these resources.”

1 posted on 05/16/2012 5:23:46 AM PDT by thackney
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API says administration’s “idle leases” complaint is absurd
http://api.org/news-and-media/news/newsitems/2012/may-2012/api-says-administrations-idle-leases-complaint-is-absurd.aspx

API President and CEO Jack Gerard said the administration’s report on idle oil and natural gas leases is a political ploy designed to distract American voters from the administration’s failed energy policy.

“Once again, the administration is trotting out claims about idle leases to divert attention from the fact it has been restricting oil and natural gas development, leasing less often, shortening lease terms, and going slow on permit approvals—actions which have undermined public support for the administration on energy. It is also increasing or threatening to increase industry’s development costs through higher taxes, higher royalty rates, and higher minimum lease bids.

“It’s absurd to contend the industry pays the government billions of dollars every year in bonus bids and rents to leave land idle. It develops leases as expeditiously as it can – often in the face of inordinate delays the administration’s own policies create. The administration is being willfully misleading when it identifies leases as idle when companies are seeking approvals of plans or permits or fighting lawsuits. Just last week, the administration finally approved drilling on leases out in Utah after a four year permitting delay. From 2009 through 2011, the industry spent $600 billion to explore and drill for oil and natural gas in the United States, activity which accounted for three percent of all jobs created during that period.

“The oil and natural gas industry explores its leases as quickly as possible, paying rent and other fees as it does so, and returns tracts to the government that do not contain economically recoverable amounts of oil and natural gas.”

API represents more than 500 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America’s energy, supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers more than $86 million a day in revenue to our government, and, since 2000, has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.


2 posted on 05/16/2012 5:24:44 AM PDT by thackney (life is fragile, handle with prayer)
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3 posted on 05/16/2012 5:26:25 AM PDT by thackney (life is fragile, handle with prayer)
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Executive Summary
Economic Impacts of Oil & Gas Development
on Federal lands in the West
http://westernenergyalliance.org/wp-content/uploads/2012/05/Final-Combined-ES-Econ-Impacts-of-OG-Dev-on-Fed-Lands-in-the-West.pdf
April 2012

Key Findings

• The total annual impact of the twenty proposed projects is 3,164 wells drilled, 120,905 jobs, $8 billion in wages, $27.5 billion in economic activity, and $139 million in government revenue. The total economic impact of the projects over their anticipated lifespan (usually between ten and fifteen years) is $383.5 billion.

• In the oil and natural gas NEPA process, companies are responsible for proposing projects, and the Bureau of Land Management (BLM) or the Forest Service (USFS) is responsible for completing the NEPA analysis. Development cannot proceed on federal lands until the government completes the NEPA analysis. Companies regularly pay for contractor support, yet the government is responsible for managing the contractors and approving the documents.

• The projects proposed in Wyoming could create 58,480 jobs, $14.8 billion in economic impact, and $82.5 million in government revenue annually, based on 1,720 wells drilled per year.

• The projects proposed in Utah could create 62,425 jobs, $12.7 billion in economic impact, and $56.7 million in government revenue annually, based on 1,445 wells drilled per year.

• The majority of the wells, 30,789, are proposed in NEPA documents that have been underway for over two years. Many of these were begun over five years ago, delaying projects for years past the usual processing times.

• Outstanding projects delayed over three years represent 22,835 proposed wells, or about 1,631 wells per year. Federal government delays to these projects are preventing the creation of 64,805 jobs, $4.3 billion in wages, and $14.9 billion in economic impact every year.


4 posted on 05/16/2012 5:29:26 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

So, ban drilling in the gulf because of an over-hyped ‘disaster,’ leaving the oil companies to move their
rigs elsewhere in the world, and then complain “they’re not drilling.”

Create hysteric panic over oil recovery from fracking, create fears from natural gas production, create massive costs to mine coal, block efficient oil transport on the Canadian/US pipeline, block nuclear plant and oil refinery construction, create ridiculous gas mileage requirements, and on and on and on.

The only fuel this country (for now, Obama) wants is enough jet fuel to send his SAW FLOTUS on separate vacations, enough gas to fuel his Canadian bus and his up-armored limo. The rest of us can walk, ride a bicycle or take one of the metro lines (that only go to the bad parts of town).


5 posted on 05/16/2012 5:33:37 AM PDT by Gaffer
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To: thackney

Why would it make one iota of difference to Obama, you or me, whether an oil company drills on parcel A or parcel B?

If the company for whatever reason thinks parcel A is not worth it, and leases and drills on parcel B, you still get one drilling site.

EXCEPT that with Obama denying them parcel B, you get zero drilling. And he knows it.


6 posted on 05/16/2012 5:35:02 AM PDT by Williams (Nobama)
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To: Gaffer

He wants them to drill where there’s no oil,
and not drill where there’s oil.

It’s obvious that his goal is to reduce our supply, increase costs, and reduce our usage.

Energy is life. Energy is freedom.
0bama’s ideological father hates both.


7 posted on 05/16/2012 5:35:57 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
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To: Williams

does he know it?

This man has no experience whatsoever in the real world.

All he knows is what his cronies tell him.

This reminds me of the whole Maurice Hinchey “use it or lose it” silliness.
They go for the soundbite - but there is not one bit of logic behind it.


8 posted on 05/16/2012 5:37:27 AM PDT by Scotswife
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To: thackney

So now Dear Leader knows how to drill for oil better than the oil company experts. Is there nothing this brilliant man can’t do??????


9 posted on 05/16/2012 5:38:18 AM PDT by Opinionated Blowhard ("When the people find they can vote themselves money, that will herald the end of the republic.")
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To: Opinionated Blowhard
Is there nothing this brilliant man can’t do??????

Nothing is what he does best.

10 posted on 05/16/2012 5:39:26 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

Reminds me of a comment by my wife. If there is a CVS on the highway and a mile later Rite Aid is building a drug store, she wants to know why “they” “need” another drugstore so close.

And I explain that’s up to them to figure out, they do it to make money based on their own analysis, it’s not based on whether we think there are “enough” drugstores in that area. Plus the competition can only bring us lower prices.


11 posted on 05/16/2012 5:39:52 AM PDT by Williams (Nobama)
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To: thackney

Don’t believe anything Mr. Obama says...


12 posted on 05/16/2012 5:40:12 AM PDT by MulberryDraw (He who is the Glory of Israel does not lie or change his mind;)
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To: Williams

Under Obama’s theory it doesn’t matter to give them more parcels, because they won’t drill on them! Except, of course, that he knows he is lying.


13 posted on 05/16/2012 5:42:25 AM PDT by Williams (Nobama)
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To: thackney

Of course Obama’s argument makes no sense, he is doing something that makes no sense in order to stop something that makes sense, as well as dollars and cents.


14 posted on 05/16/2012 5:44:50 AM PDT by Williams (Nobama)
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To: thackney

Stinking, evil oil companies!

How dare those bastards try to develop oil resources for the people, generate billions for the American economy, and pay billions more in taxes!!


15 posted on 05/16/2012 5:47:12 AM PDT by Williams (Nobama)
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To: MulberryDraw

Don’t believe anything the left says on the surface.
Watch and discover their agenda, then everything they say and do makes more sense.

Their ideological father is a liar and the father of lies.


16 posted on 05/16/2012 5:47:59 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
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To: thackney

excellent find Thackney. as usual, you know where the sources lie in the oil and gas business in technical, regualatory and economic subject matter.

with natural gas at $2-$2.5 per mmbtu or dry mscf and the domestic glut expected to remain for years, i’d bet that very few of those projects could be economic. I don’t beleive the pace of development, or cost of non-development is realistic either. The amount of wells they discuss, and the time frame, would require about 150 to 200 or more land drilling rigs, crews and support to materialize virtually overnight.

who in their right mind would throw money at the western US federal properties, mostly dry natural gas, with oil and condensate rich opportunities in the Permian, Williston,
S Texas and other basins.

on one hand we have the feds stamping thir feet saying that big oil won’t develop and should be out there “making work”. and on the other we have big oil (small and mid sized US independents onshore) saying that they are over-regulated, and the are. If these were going to be profitable projects, they would be much more active.


17 posted on 05/16/2012 6:07:28 AM PDT by EERinOK
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To: thackney

Another exhilarating example of form over substance, the kind of thing Obama has excelled in during his entire career.


18 posted on 05/16/2012 6:07:51 AM PDT by exit82 (Democrats are the enemies of freedom. Be Andrew Breitbart.)
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To: thackney

What I’d like to see: “Oil Companies challenge Obama to take a flaming leap”.


19 posted on 05/16/2012 6:10:25 AM PDT by PzLdr ("The Emperor is not as forgiving as I am" - Darth Vader)
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To: thackney
“The industry last year alone invested $200 billion in the United States,” Gerard said. “So we’re hardly sitting on anything. We’re waiting for Uncle Sam to give us permission to produce these resources.”

Wouldn't it be interesting if the API would publish a listing showing the date all if the leases was granted and date the government gave the OK to start drilling?

20 posted on 05/16/2012 6:16:36 AM PDT by dearolddad
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To: MrB

Barky knows that the only way wind and solar will be accepted is to drive the cost of hydrocarbons off the chart.


21 posted on 05/16/2012 6:27:22 AM PDT by Eric in the Ozarks
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To: thackney
Open drilling our Fearless leader says then closes down refineries on the east coast with bureaucratic delays and regulations.
22 posted on 05/16/2012 6:31:54 AM PDT by bikerman (you can take the man out of the jungle but can't take the jungle out of the man)
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To: thackney

Right, because five seconds after they do, dear leader’s going to jump in and suddenly cancel the leases. He’s done it before and he’s fooling himself if we think he won’t do it again.


23 posted on 05/16/2012 6:36:21 AM PDT by RWB Patriot ("My ability is a value that must be purchased and I don't recognize anyone's need as a claim on me.")
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To: Opinionated Blowhard

Yeah: Put his money where his mouth is.


24 posted on 05/16/2012 6:37:53 AM PDT by RWB Patriot ("My ability is a value that must be purchased and I don't recognize anyone's need as a claim on me.")
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To: RWB Patriot

That is EXACTLY why the economy “refuses” to recover,
and why businesses aren’t hiring, expanding, or investing,
even though they have cash.

They don’t trust this fascist not to make their expenditures worthless by fiat.


25 posted on 05/16/2012 6:43:42 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
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To: thackney

If only there were “gay” leases available, Obama would be drilling them tomorrow because his position on “gay” leases has evolved.


26 posted on 05/16/2012 7:07:01 AM PDT by ProtectOurFreedom
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To: Williams
Classic example of Zippo playing to people that are ignorant of how the oil business works.

Say for example you have a 10,000 acre lease.

You drill a well on the lease which comes in mainly a gas well with some condensate.

You need a pipeline access in order to produce the well, but you can't get pipeline access because of inviro regs.

You then shut the well in, but you cannot keep your lease unless you are actually producing from the well or you pay a shut in fee. So you pay a shut in fee.

Then you have what's refereed to as a performance clause in the lease. That means in order to keep the entire lease and not just the area where the one well is, you have to continue drilling operations.

Every new well you drill that can produce is then shut in and you pay a shut in fee.

You pay out but get nothing back.

If you abandon the lease you have to plug all the wells.

They need leases they can get their product out of and to market.

27 posted on 05/16/2012 7:24:36 AM PDT by IMR 4350
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To: Williams
Classic example of Zippo playing to people that are ignorant of how the oil business works.

Say for example you have a 10,000 acre lease.

You drill a well on the lease which comes in mainly a gas well with some condensate.

You need a pipeline access in order to produce the well, but you can't get pipeline access because of inviro regs.

You then shut the well in, but you cannot keep your lease unless you are actually producing from the well or you pay a shut in fee. So you pay a shut in fee.

Then you have what's refereed to as a performance clause in the lease. That means in order to keep the entire lease and not just the area where the one well is, you have to continue drilling operations.

Every new well you drill that can produce is then shut in and you pay a shut in fee.

You pay out but get nothing back.

If you abandon the lease you have to plug all the wells.

They need leases they can get their product out of and to market.

28 posted on 05/16/2012 7:24:36 AM PDT by IMR 4350
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