BLM inventory finds most remaining onshore oil and gas off-limits

US onshore public lands contain an estimated 31 billion bbl of crude oil and 231 trillion cubic feet of natural gas, the Bureau of Land Management said in its latest inventory.

US onshore public lands contain an estimated 31 billion bbl of crude oil and 231 trillion cubic feet of natural gas, the US Bureau of Land Management said in its latest inventory.

It also found that 60% of the onshore federal acreage with oil and gas potential is presently closed to leasing, effectively making 62% of the oil and 41% of the gas inaccessible. Another 30% of federal onshore oil and 49% of federal onshore gas may be developed subject to seasonal timing and other restrictions over and above standard lease terms, according to the inventory which the Energy and Policy Conservation Act of 2000 requires.

In the 279 million acres which the inventory covered, 8% of the crude and 10% of the gas was accessible under standard lease terms, officials of BLM and the US Department of Interior said. The land includes acreage managed by BLM and other DOI agencies, and by the US Forest Service, which is part of the US Department of Agriculture.

"The report itself does not make recommendations. However, a normal person could ask why 61% of available onshore oil resources are not available when prices are about $130/bbl. Our hope is not to give the solution but begin the discussion of what to do with our domestic resources," C. Stephen Allred, assistant Interior secretary for land and resources, said in a teleconference with reporters.

Remaining onshore natural gas on federal land is most heavily concentrated in southwestern Wyoming while the biggest concentrations of remaining onshore oil are along Alaska's North Slope, according to Richard Watson, a senior physical scientist at BLM who also participated in the teleconference.

Natural gas price

"While most of the public reaction now has to do with gasoline and motor fuel prices, I have a great concern about what's happening to the price of natural gas. Its price has doubled in a very short period. If you look at its relationship to oil prices, you can see that the natural gas price has not appreciated to the level it might be. That has huge implications for the economy," Allred said.

He conceded that deciding to lease more federal acreage won't bring more oil or gas to the market immediately, but added that it could have a psychological impact. "A commitment for more domestic production may well have an impact on price beyond what it could contribute to supplies. We're not talking about ignoring environmental and other issues. What we are encouraging, and what I think this report allows us to start, is considering whether we are better able now than we were in the 1980s to protect important environmental values and still develop oil and gas," he said.

BLM issued similar reports in 2003 and 2006 as required by EPCA but expanded the inventory's scope to include conditions of approval, such as seasonal restrictions, under a requirement of the 2005 Energy Policy Act. Six study areas were added and barriers to development were assessed for the first time, Watson said.

Allred said that while constraints on additional development may exist due to rig and oilfield supply capacity, he believes the oil and gas industry would be capable of producing more domestic energy. He also questioned concerns raised by Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.) over whether lessees are moving quickly enough to develop their holdings. "Those leases are offered for a specific period. No one can sit on them. The question is whether they are worth developing. That's a matter for the leaseholder to decide. He pays the federal government rentals and bonuses whether he moves ahead or not. Our goal is to make sure the government and public get a fair return," Allred said.

He said that any discussion of whether to lease more acreage should reflect improvements in technology which allow oil and gas to be produced with substantially fewer environmental impacts. "I'm not being critical of what's been done in the past. Given what's happening to oil and gas prices, however, I think we need to look at the choices we've made and ask if they are still appropriate. This report can provide a basis for serious discussions," Allred indicated.

Contact Nick Snow at nicks@pennwell.com

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