Last week, majority members of the House Energy and Commerce Committee predictably cherry-picked several “key findings” of a recently updated Congressional Research Service report (CRS), which studied oil and gas production on both federal and non-federal lands. In their release, the members claim that Obama administration policies are causing a decline in oil and gas production for federally owned resources both onshore and offshore. But a closer read of the report tells a very different story.
For starters, committee members completely ignored widely-reported, public information—information that points to an obvious conclusion as to why oil and gas production fluctuates on public lands: companies follow the oil, and much of the most valuable deposits are now found on non-federal lands. In 2012 testimony before the same committee, Adam Sieminski, an EIA Administrator said, “because the shale resource basins are largely outside of the Federal lands, so too is shale production. In this case, the geology is working in favor of non-Federal landowners.”
The Bipartisan Policy Center echoed that opinion in a report last year saying, “The large shale formations that have attracted most of the recent development activity are located in parts of the country where the federal government simply does not have large land holdings including notably the Bakken, Barnett, Haynesville, Marcellus, and Fayetteville play.”
Here are some more highlights. The items in quotes come directly from the CRS report, and were clearly omitted by the House majority members:
Application for Permits to Drill
Their Claim: “Despite the new timeline for review created under the Energy Policy Act of 2005, it took an average of 307 days to process an application for permits to drill (APDs) on federal lands in 2011, up from an average of 218 days in 2006.”
The Omission: “The difference, however, is that in 2006 it took the Bureau of Land Management (BLM) an average of 127 days to process an APD, while in 2011 it took BLM 71 days. In 2006, the industry took an average of 91 days to complete an APD, but in 2011, industry took 236 days.”
Proven Oil Reserves
Their Claim: There are 5.3 billion barrels of proved oil reserves located on federal acreage onshore and another 5.6 billion barrels of proved reserves offshore (nearly all in the Gulf of Mexico). Taken together, the U.S. federal oil reserves equal about 43 percent of all U.S. crude oil reserves. Proved oil reserves are amounts accessible under current policy, price, and technology.
The Omission: “Historically, according to Department of the Interior (DOI) data, crude oil production on federal lands was consistently under 20% of total U.S. production until the late 1990s. Annual production then surged on federal lands (primarily offshore), rising to over 30% in the early 2000s and reaching a high point of about 36% in FY2010. As a result of recent production increases on non-federal lands, the question is raised whether non-federal lands might regain a more dominant position of roughly 80%-85% of total U.S. crude oil production.”
Crude Oil Onshore Production on Federal versus Non-Federal Lands
Their Claim: U.S. crude oil production on non-federal lands increased 61 percent from 2009 to 2013 (3,464,400 barrels per day in 2009 vs. 5,576,700 bpd in 2013). U.S. crude oil production on federal lands fell 6 percent from 2009 to 2013 (1,768,600 bpd in 2009 vs. 1,658,300 bpd in 2013).
The Omission: This ignores the differences between onshore and offshore production and omits the fact that total federal production increased from 2012 to 2013, while onshore oil production has been on the rise every year up nearly 30% from 2009 (Table 2, pg. 7).
Crude Oil Offshore Production on Federal versus Non-Federal Lands
Their Claim: U.S. crude oil production on federal offshore lands decreased 13 percent from 2009 to 2013 (1,482,900 bpd in 2009 vs. 1,294,000 bpd in 2013).
The Omission: Yet total federal crude oil production increased from 2012 to 2013 from 1,643,000 bpd to 1,658,300 bpd.
Natural Gas Production Onshore on Federal versus Non-Federal Lands
Their Claim: U.S. natural gas production on non-federal lands increased by 33 percent from 2009 to 2013 (16,241 billion cubic feet in 2009 vs. 21,592 bcf in 2013). U.S. natural gas production on federal lands decreased 28 percent from 2009 to 2013 (5,372 bcf in 2009 vs. 3,878 bcf in 2013).
The Omission: “The big shale gas plays are primarily on non-federal lands and are attracting a significant portion of investment for natural gas development.” (Summary, paragraph 2)
Natural Gas Production Offshore on Federal versus Non-Federal Lands
Their Claim: U.S. natural gas production on federal offshore lands decreased 47 percent from 2009 to 2013 (2,205 bcf in 2009 vs. 1,172 bcf in 2013). U.S. natural gas production on federal onshore lands decreased 15 percent from 2009 to 2013 (3,167 bcf in 2009 vs. 2,706 bcf in 2013).
The Omission: This ignores the fact that due to over-supply, the price of dry gas has crashed making drilling unprofitable, while natural gas liquids found largely under non-federal lands remain profitable. As stated in the CRS Report “Any increase in production of natural gas on federal lands is likely to be easily outpaced by increases on non-federal lands, particularly because shale plays are primarily situated on non-federal lands and are where most of the growth in production is projected to occur.” (Pg. 6, para 2)
Proved Dry Gas Reserves
Claim: Federal lands have 85 trillion cubic feet (tcf) of proved dry gas reserves.
The Omission: This confuses dry natural gas and natural gas liquids. The price of dry natural gas has collapsed, while Natural Gas Liquids remain profitable.