Oil Leases on ‘68 Million Acres’ No Guarantee of Oil, Experts Say
August 7, 2008 - 6:59 PMHouse Speaker Nancy Pelosi says a Republican plan to expand domestic oil drilling -- instead of forcing oil companies to drill on the 68 million acres they've already leased -- is a "hoax" and "unworthy of serious debate."
But the nation’s oil producers say Pelosi is being disingenuous, because federal regulations restrict their exploration on the leased land, while much of the 68 million acres is already “tapped out” of oil.
House Republicans are advocating an "all-of-the-above" approach to energy. They embrace expanded drilling, conservation, the development of alternative energy sources, and expanded nuclear power.
But Pelosi, in a recent statement, described Republicans as oppositional:
“House Republicans,” Pelosi said, “have opposed forcing oil companies to drill on the 68 million acres they already control, new investments in renewable energy, increasing vehicle fuel efficiency standards, making mass transit more affordable, cracking down on price gouging, and releasing oil from the government’s stockpile.”
Republicans’ push to lift the congressional ban on offshore drilling is promoting “the interests of Big Oil and the Bush administration,” she said.
One of the Democrats’ immediate solutions to high energy prices – to use oil from the Strategic Petroleum Reserve – would bring prices down right way, Pelosi said, while the Republican plan to drill offshore will not yield results for years and will lower gas prices a negligible amount.
Sen. Barack Obama (D-Ill.), the presumptive Democratic nominee, as part of his energy plan has adopted the Democrats' “use it or lose it” approach to existing oil and gas leases. He also would require oil companies to develop the 68 million acres that they've already leased.
But oil producers say the Democrats' call to “require” companies to drill on the 68 million acres they've already leased is not honest.
In fact, oil producers must already meet government standards for producing oil on leases, said a spokeswoman for the American Petroleum Institute (API), a trade organization that represents America’s oil and natural gas industry.
The Department of the Interior’s Bureau of Land Management grants leases to oil companies with the requirement that the companies produce oil from the land within five to 10 years, depending on the stipulations of the lease, said Karen Matusic, media relations manager for the API.
Moreover, the oil companies pay billions of dollars for these leases, she said, with no guarantee that oil will be found in the leased areas.
“In effect, those leases are a right to explore,” Matusic said.
Matusic rejected the notion that oil companies are sitting on the land and not drilling because they want prices to rise, as Democrats have suggested. The oil companies are investing billions of dollars in the leased lands, she said, and “the last thing you want to do is sit on potential oil production or natural gas production.”
“If they aren’t being developed as fast as some in Congress would like them to be, the reason mainly has to do with geology, or the reality that it takes a long time to develop these leases, depending on where they are, and there is no guarantee that they have oil and gas on them,” she said.
Michael Morris, a petroleum markets expert at the Energy Information Administration, the statistical arm of the Energy Department, said drilling on the 68 million acres already leased would contribute little to the domestic oil supply.
If there was much more oil to be found, the oil companies would be drilling for it, he said, since it is in their best interest to obtain more oil.
“That’s pretty much tapped out,” he said of the 68 million acres. “And they’ve done seismic surveys of those areas, and they haven’t found much.”
On Aug. 6, House Republican Leader John Boehner issued an "alert," accusing "desperate Democrats" of peddling "myths" and taking "liberties" with the facts about domestic oil drilling and the Republicans' energy plan.
He said one of those "myths" involves the Democrats' "use it or lose it" policy for the 68 million acres where oil companies currently hold leases but are not drilling.
"The fact is, the so-called “use it or lose it” rule is already the law of the land, and Speaker Pelosi and Majority Leader Steny Hoyer (D-Md.) should know that because they voted for it all the way back in 1992," Boehner said.
He explained: "When an energy company gets a lease, there is no guarantee that there is oil or natural gas present under the leased lands. If oil is present, exploration, siting, and development can take up to a decade before any new energy is produced. So the land Democrats are talking about either has no recoverable energy resources, those resources are currently being developed, or they have already been developed. The entire process can take years."
Presumptive Republican presidential nominee Sen. John McCain (Ariz.), meanwhile, does not mention the 68 million acres in his energy plan. He has called for the expansion of offshore drilling, a measure that Obama, Pelosi and other top Democrats in Congress -- as well as environmental activists -- oppose.
Even drilling offshore is not a sure thing, Matusic noted.
“We aren’t guaranteed,” she said. “That’s why it’s a very risky business.”
But, Matusic added, there are some areas offshore that are known to contain both oil and natural gas.
(CNSNews.com Correspondent Keriann Hopkins contributed to this report.)