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Industry groups dispute White House energy progress report

Oil and gas industry groups quickly challenged White House efforts to take credit for lower crude oil imports and higher US production in the year since US President Barack Obama unveiled his Blueprint for a Secure Energy Future. A report he received underscored progress toward reducing US reliance on foreign crude by a third in a little more than a decade, the president said on Mar. 12.

Other administration officials outlined gains at the daily White House press briefing. “Thanks to booming US oil and gas production, more-efficient cars and trucks, and a world-class refining sector, we've already cut net imports by 10% or 1 million b/d in the last year alone,” said Heather Zichal, a deputy assistant and a top energy policy advisor to Obama. “And with the new fuel economy standards the president announced last year, we're on pace to meet our goal by the end of the decade.”

“On the level of activity that we have under way in the United States, we had a 55% increase in the number of rigs that we're operating onshore for both oil and gas, as well as a significant number operating in the Outer Continental Shelf, including in the Gulf of Mexico, where the gulf is back to work again and oil and gas production is taking place there,” noted US Sec. of the Interior Ken Salazar, who also participated in the briefing.

Industry associations challenged the administration’s assessment. “The report conveniently avoids the nearly 15% decrease in oil production on federal lands,” Kathleen Sgamma, vice-president of government and public affairs for the Western Energy Alliance in Denver, said on Mar. 13.

“This administration has made energy development on western federal lands increasingly difficult, time consuming, and cost prohibitive, which will affect production far into the future,” she maintained. “Redundant regulation and bureaucratic obstacles have constrained domestic energy development, job creation, and economic growth in communities across the West.”

Excludes oil, gas

“I keep hearing about an all-of-the-above strategy, but I don’t hear one that includes oil and gas,” Erik Milito, the American Petroleum Institute’s upstream director, told reporters during a Mar. 13 teleconference. “I’m discouraged to hear Sec. Salazar say we have to bow down to world markets when we have so many domestic resources waiting to be developed if the policies are improved.”

He said Obama’s administration says its policies have supported more oil development and production is rising, but most of the increases relate to projects begun before it came into office as well as what’s happening on state and private lands.

“Here’s the problem: The administration has been restricting where oil and natural gas development may occur, leasing less often, shortening lease terms, going slow on permit approvals, and increasing or threatening to increase industry’s development costs through higher taxes, higher royalty rates, higher minimum lease bids, and ineffective regulations and regulatory processes,” Milito said.

Sgamma said because of additional bureaucratic processes on federal lands, oil and gas project lead times are 5-10 years. “North Dakota, which is the source of the huge increase in American oil production, would not have 3% unemployment and a billion dollar budget surplus if the Bakken formation were largely on federal lands,” she said.  If [it was]…, it would be year five of a seven-year federal environmental analysis with no production in sight.”

Milito noted that despite Salazar and other administration officials’ statements that global oil prices are primarily influenced by international events, US policies that promote greater US development send a clear signal to markets that affects prices. “The ability of this country, working on a North American basis, could be impressive in getting us to where we’ve never been before,” he said. “The US should be leading the charge. We have an opportunity, working with Mexico and Canada, to get to energy security. Even if we still imported 2 million b/d, we’d be in better shape.”

Contact Nick Snow at nicks@pennwell.com.


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