CRS finds US production grew outside federally controlled areas

While US oil and gas production has climbed to its highest level in 2 decades, all of the growth since 2007 has occurred outside federally controlled areas where production actually declined, a recent report from the nonpartisan Congressional Research Service found.

“Private sector investment and new technologies are driving increases in oil and gas production,” said US Rep. Ed Whitfield (R-Ky.), chairman of the House Energy and Commerce Committee’s Energy and Power Subcommittee, which released the Feb. 28 CRS analysis on Mar. 5.

“Where the states have been in charge, we have seen energy development boom in a safe and responsible way, but under federal control we have seen a sharp decline in production,” he declared. “A web of red tape and a backlog of delayed permits are blocking important energy production opportunities on federal lands.”

All of the fiscal 2007-12 US crude oil production increase took place outside nonfederal areas onshore and offshore, and the federal share of total domestic crude output fell by about seven percentage points during that period, the report said.

US gas production has grown by 4 tcf/year since 2007 as output grew by 40% on state and private land and fell by about 33% on federal onshore and offshore areas, it added.

Congress may consider two different proposals to increase oil and gas production from federally issued leases, according to the report’s executive summary.

Nonproduction fee

It noted that some members have proposed a $4/acre annual fee on nonproducing tracts which they believe are not being developed in a timely fashion. US Sec. of the Interior Ken Salazar imposed higher federal offshore lease rents in 2009 to discourage holding unused leases and to move more tracts into production if possible, it said.

Other members of Congress may propose legislation to streamline federal oil and gas drilling permit application processing, the report continued. It said that a review mandated by the 2005 Energy Policy Act found the average time it took producers and the US Bureau of Land Management to process a federal drilling permit application climbed from 218 days in fiscal 2006 to 307 days in 2011.

“The difference, however, is that in 2006 it took BLM an average of 127 days to process an [application], while in 2011 it took BLM 71 days,” CRS said in its report. “In 2006, the industry took an average of 91 days to complete [a drilling permit application], but in 2011, [it] took 236 days. BLM stated, in its fiscal 2012 and 2013 budget justifications, that overall processing times per [application] have increased because of the complexity of the process.”

“As [gasoline] prices continue to rise past $4/gal, American families are looking to Washington for solutions to help provide relief at the pump,” Whitfield said. “Expanding oil production on federal lands offers a real opportunity to help increase domestic supplies and stabilize prices as well as boost federal revenues.”

Contact Nick Snow at nicks@pennwell.com.

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