Save Article Instructions
Close 

DOI says leases remain idle; industry groups dispute claim

More than two thirds of federal offshore tracts leased by the oil and gas industry and more than half of the federal onshore acreage companies hold in the Lower 48 remains idle, the US Department of the Interior said in a new report. Groups representing producers immediately dismissed the allegation as tired election year rhetoric.

“We continue to offer new areas onshore and offshore for leasing, as we have over the last 3 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,” Interior Sec. Ken Salazar said.

But American Petroleum Institute Pres. Jack N. Gerard said the administration is reviving claims about idle leases to divert voters’ attention from how it has restricted oil and gas development, shortened lease terms, and move slowly on permit decisions.

“It’s absurd to contend the industry pays the government billions of dollars every year in bonus bids and rents to leave land idle,” he maintained. [The industry] 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 permits, doing exploratory drilling, or fighting lawsuits.”

Misrepresents process

Kathleen Sgamma, vice-president of government and public affairs at the Western Energy Alliance in Denver, said the administration continues to deflect blame for leases that are not producing onto the industry with rhetoric that misrepresents how oil and gas development on federal land works.

“We estimate that about half the nonproducing acreage results from [DOI’s] own redundant regulations and bureaucratic delays,” she said. “If the administration is really concerned about undeveloped leases and increasing domestic energy production, it would direct DOI to move forward with projects that companies have already proposed, and roll back some of the layers of bureaucratic red tape now imposed on western energy producers.”

The Independent Petroleum Association of America said in a statement that producers develop federal leases in a process that involves steps including financing, tract evaluation, getting permits, drilling exploratory wells, and finally producing the oil and gas.

“Leases in the exploration phase are considered by some to be ‘idle’ even though companies are actively exploring for oil and gas and risking hundreds of millions of dollars in the process, such as with seismic surveys and other tests,” IPAA said, adding, “Many offshore leases are 5 years old or less—with a moratorium in between, it's not surprising that they aren't producing energy yet.”

Contact Nick Snow at nicks@pennwell.com.


To access this Article, go to:
http://www.ogj.com/content/ogj/en/articles/2012/05/doi-says-leases-remain-idle-industry-groups-dispute-claim.html