Petroleum Industry Calls Interior Secretary’s Oil Claims ‘Fundamentally Absurd’

Penny Starr | March 13, 2012 | 7:24pm EDT
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Secretary of the Interior Ken Salazar. ( Starr)

( – Interior Secretary Ken Salazar’s claim that the oil and gas industry is not taking advantage of the leases it already holds is "fundamentally absurd," says Erik Milito of the American Petroleum Institute (API).

During a conference call with reporters on Tuesday, asked Milito about Secretary Salazar’s claim on Mar. 12 that the oil and gas industry is not using 72 million acres of leased land and ocean and is “sitting on 7,000 permits.”

“That’s fundamentally absurd and that’s the kind of rhetoric we need to end as quickly as possible,” Milito said.

At a White House press conference on Monday, Salazar said, “Just from the federal lands themselves, gas production in 2011 was one of the best years that we've had in the last decade. And the acreage that is being allowed to be developed by industry now includes about 72 million acres, both on the land and in the sea, where they currently are not developing. That is 72 million acres that have been leased to oil and gas companies where they currently are not developing.”

Salazar also said that oil and gas companies are "sitting on" 7,000 permits that would allow them to start producing immediately.

API’s Milito dismissed Salazar’s claims and said that even if leases are in place, permits are needed to start the process that results in productive oil and gas operations and cited Alaska as an example.

“The government, over the course of the past five years, has not provided the permits to allow the industry to develop any – let alone one – of hundreds of leases that they currently have in Alaska,” Milito said.

(AP Photo/Charlie Riedel)

The conference call arranged by API, the largest trade association for the U.S. oil and gas industry, was designed to reject the rosy picture Salazar and Obama administration energy adviser Heather Zichal painted at the White House on Monday.

Zichal said President Barack Obama’s energy plan has made “historic achievements,” including increasing the production of domestic oil and gas and that the administration had “doubled renewable energy generation, developed advanced alternative fuels and supported cutting-edge research and development of clean-energy technologies.”

In his opening remarks to reporters on Tuesday, Milito used the word “failure” to describe the Obama administration’s energy policies and said the right energy policies can make a difference in the global market and at the pump.

“Gasoline prices are higher today, at least in part because government has neglected to pay sufficient attention to the importance of producing more of our own oil and natural gas,” Milito said. “Adding supplies to markets is critical to keeping downward pressure on prices.”

“And government policy has prevented and continues to prevent that,” Milito said.

In this March 2, 2012 photo, Al Milani of Staten Island, pumps gas in Manhattan at a BP mini-mart. (AP Photo/Gene J. Puskar)

“The administration says its policies have supported more development and that oil production is rising, but most of today’s production increases relate to projects begun before it came into office, as well as to what is happening on state and private lands,” he said. “Moreover, from 2009 to 2011, the fact is that production from federal lands and federal waters combined declined significantly for both oil and natural gas.”

API released a white paper in conjunction with the conference call, which includes a graphic showing U.S. oil and gas production from 2009 through 2011 gleaned for the federal Energy Information Administration’s Office of Natural Resource Revenue. The graphic shows an increase of oil and gas production on non-federal lands and a decrease of production on federal lands. (White Paper,  lands.pdf)

The paper includes a list of actions taken by the Obama administration over the past three years that provide a “mostly discouraging” energy picture.

Some of those actions include the cancellation or delay of leases on federal lands, proposing new regulations for oil and gas production on federal lands, and proposing billions of dollars in new taxes on the oil and gas industry.

These actions, API says, have caused operations to be delayed or to cease in the Gulf of Mexico, Alaska, and off of the eastern shore of Virginia.

Last year, the Obama administration released its five-year “Blueprint for A Secure Energy Future” plan, which was touted at the White House press conference on Monday when a one-year progress report on the plan was unveiled.

The API white paper (lands.pdf) says the White House proposal “fails to open any new offshore areas to oil and gas development” and that Obama’s “all-of-the-above” energy policy does not include promoting the oil and gas industry.

So far in 2012, the API white paper states that the Obama administration rejected the Keystone XL Pipeline and “recommends removing from leasing availability over 1.8 million acres of oil shale and tar sands energy resources in Colorado, Utah and Wyoming.”

President Barack Obama. (AP Photo/Pablo Martinez Monsivais)

“The administration has been restricting where oil and natural gas development may occur, leasing less often, shortening lease terms, going slow on permit approvals, and increasing or threatening to increase industry’s development costs through higher taxes, higher royalty rates, higher minimum lease bids, and ineffective regulations and regulatory processes,” Milito told reporters.

The one-year progress report on Obama’s energy plan gives glowing reviews from all six federal agencies that compiled it – Energy, Transportation, Interior, Environmental Protection Agency, Agriculture and Housing and Urban Development.

“We wanted to present a report on the significant progress we have made,” says a letter to the president included with the report.

“During the last year alone, we established new incentives to increase safe and responsible domestic oil and gas production; proposed the toughest fuel economy standards for cars and trucks in history; provided millions of Americans with efficient and affordable transportation choices; launched new programs to improve energy efficiency in our homes, buildings, public transit, aviation and roadway systems; and took unprecedented steps to make the United States a leader in the clean energy race.”

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