Former Shell Oil President: New Oil Production Mainly Takes Place on Private Land

March 13, 2012 - 8:23 AM
Oil Prices

In this March 2, 2012 photo, a New York City taxi driver pumps gas at a BP mini-mart, in New York. Experts say pump prices are rising on the expectation that supplies will dip next month while refineries switch from winter to summer gasoline blends. Forecasts see gas rising as high as $4.25 per gallon in late April. (AP Photo/Gene J. Puskar)

(CNSNews.com) - Former Shell Oil President John Hofmeister said Sunday that new production of oil mainly takes place on private land, because federal land permits have been “dramatically reduced in the last several years.”

“Where the land is commonly held, actually, that’s only on federal land, and as I said, federal land permits have been reduced dramatically in the last several years. Private land – mineral rights to private land – are in many states the ownership of the land owner, not the federal government, not the people, but the land owner. And where those private rights exist, that’s mainly where new production is taking place,” he said.

According to the Institute for Energy Research, oil production on federal lands declined 11 percent in fiscal year 2011 compared to 2010, and natural gas on federal lands was down by six percent. Oil production on private and state lands, however, was up 14 percent from 2010 to 2011, and natural gas production was up 12 percent.

During an appearance on the “Washington Journal,” Hofmeister responded to a caller, who asked why the U.S. puts the oil that it produces on the “world market” for countries like China to bid on.

Hofmeister said worldwide oil production is estimated at 86 to 88 million barrels a day.

“The demand is closer to 90 million barrels a day, and the consequence of that is we’re not producing enough to meet the global demand overall. If the U.S., which used to produce 10 million barrels a day in the 1980s – today it produces less than seven, so we have dropped our production in the U.S. by more than three million barrels a day,” he said.

“If we produced 10 [million barrels a day] – which we used to and we could today, if we were allowed to – that would have an ameliorating effect on global prices,” Hofmeister said.

“We do not sell crude oil – other than a very small amount from Alaska – outside the country. We consume all the crude oil. Plus, we import between 11 and 13 million barrels a day from other parts of the world into this country,” he said. “So the caller may not understand that we don’t produce enough crude oil to ship it to other parts of the world. And we need another, almost twice as much crude oil, just to get through everyday.”