Interior Department Trots Out Old Idle Leases Argument
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The Department of the Interior (DOI) trotted out a report claiming oil and gas companies are dawdling around and not developing oil and gas leases on federal land.
This story isn’t new; the President made a similar argument last year. At the time, Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy, said the notion was ludicrous: “In most cases, these ‘unused’ leases are awaiting permitting and environmental reviews before exploration and production can occur.”
Matt Letourneau, expanded on this further last year:
The notion that oil and gas companies, who paid millions of dollars to the government for the right to explore such lands for a set period of time (usually 5-7 years), would then deliberately “sit” on them instead of exploring --and generating revenue-- simply defies logic. Why would a company spend millions of dollars for a lease and then deliberately not explore it?
Proponents of this argument exhibit a fundamental lack of understanding of how the oil and gas exploration process works. Exploring new areas for oil and natural gas requires a great deal of time and capital investment with no guarantee of any payoff. Those who are perpetuating this myth are saying that unless oil is literally coming out of the ground on a given acre, it is sitting idle and therefore doesn’t “count.” That’s the wrong way to look at it.
That philosophy fails to take into account the actual exploration process, which includes many time consuming steps both to satisfy government regulation and to physically be able to explore both onshore and offshore. These steps include surveys, seismology reports, environmental impact analysis, and then the construction of infrastructure to actually obtain oil and natural gas. If all of that activity is occurring on a given tract of land, it is still considered to be on the “idle” list by those making this argument.
Further, for onshore leases, the review process can easily taken several years due to litigation and challenges under the National Environmental Policy Act, and offshore leases are subject to delays in the administration and permitting of lease sales, such as we are witnessing in the Gulf of Mexico right now.
If oil and gas companies were sitting on leases then why has there been an increase in oil and gas production on private and state lands? What’s different about federal lands? The DOI report doesn’t even bother to ask that question, because that would cut against their narrative of blaming energy companies for high energy prices.