THE PROGRESSIVE CONSERVATIVE, USA
An Online Journal of Political Commentary & Analysis
Volume X, Issue # 201, August 14, 2008
Dr. Almon Leroy Way, Jr., Editor
Government Committed to & Acting in Accord with Conservative Principles
Ensures a Nation's Strength, Progress, & Prosperity
IDLE LEASES, OR ADDLED MINDS?
Political Grandstanding Won't Help Companies Find Oil on Federal Leases
By Newt Gingrich & Roy Innis
CONGRESSIONAL DEMOCRATS OPPOSING INCREASED U.S. DOMESTIC OIL & NATURAL GAS PRODUCTION:
DEMOCRATIC PARTY POLITICIANS ACTING COUNTER TO THE BEST INTERESTS OF AMERICAN VOTERS, WHO ARE HURTING
FROM HIGH ENERGY PRICES -- DEMOCRATS UNWILLING TO UPSET THEIR LEFTWING POLITICAL BASE & THEIR ALLIES
AMONG THE RADICAL ENVIRONMENTALISTS -- THE REFUSAL OF CONGRESSIONAL POLITICIANS & FEDERAL BUREAUCRATS
TO AUTHORIZE & ISSUE LEASES & PERMITS FOR ONSHORE & OFFSHORE OIL DRILLING -- DIRE NEED FOR A LAW THAT
FORCES BUREAUCRATS TO ISSUE OIL LEASES & DRILLING PERMITS IN AN EXPEDITIOUS MANNER -- NEED TO IMPOSE
FINANCIAL PENALTIES ON ENVIRONMENTALIST GROUPS THAT LOSE THEIR LEGAL ACTIONS IN COURT -- ABSOLUTE NEED
TO TO VOTE THE CONGRESSIONAL DEMOCRATS & "RINOS" ("ME TOO" REPUBLICANS) OUT OF OFFICE
FULL STORY:
Senator Jeff Bingaman (Democrat - New Mexico), Congressman Nick Rahall (Democrat - West Virginia), U.S. House
Speaker Nancy Pelosi (Democrat - California) and other members of Congress who oppose producing more American oil
are in a bind.
They know voters are hurting from high gas prices and overwhelmingly want the government to allow more American oil
production. But they can’t side with the American people and risk upsetting their Leftwing base and radical environmentalist
allies. So, they needed a way to make us think they support more drilling, while effectively preventing us from ever drilling a
single new well.
They think they’ve found a solution: a proposed “use it or lose it” law on federal leases for energy exploration. Bingaman,
Rahall and fellow drilling opponents accuse the oil industry of “sitting on” 68 million acres of “non-producing” leased land.
They want to force energy companies to “use” this leased land within ten years, or lose all exploration and drilling rights.
America can only hope the proposed law is Bingaman and Rahall’s clumsy attempt at political jujitsu. The alternative is that
the politicians in charge of committees that determine US energy policy are confused and ludicrously disconnected from
reality.
First, lease agreements already require that leased land be used in a timely manner. The 1992 Comprehensive Energy Policy
Act requires energy companies to comply with lease provisions, and explore expeditiously, or risk forfeiture of the lease. So,
the Bingaman-Rahall “solution” effectively duplicates current law.
Second, and more disturbingly, Bingaman's and Rahall’s groundless accusation and proposed legislation rely on the absurd
assumption that every acre of land leased by the government contains oil. Obviously, that’s not the case.
The truth is, finding oil is a long, complex, cumbersome, expensive process. It starts with an idea – about what kinds of
geologic structures are likely to hold this vital resource. Based on that idea, companies purchase leases: agreements that
allow them to test their ideas, and hopefully find and produce oil and gas from leased properties.
Then geologists look at existing data and conduct seismic, magnetic, and geophysical tests of the leased areas. They create
detailed 3-D computer models of what subsurface rock formations look like, and whether there might be any “traps” that
could hold petroleum.
Most of the time, all this painstaking, expensive initial analysis concludes that the likelihood is too small to justify drilling an
exploratory well, since the cost of a single well can run $1 to 5 million onshore, and $25 to 100 million in deep offshore waters.
Only one of three onshore wells finds oil or gas in sufficient quantities to produce it profitably; in deep water, only one in
five wells is commercial. Thus, only a small percentage of the leased acres end up producing oil.
This is important because it means most of those 68 million acres Bingaman and Rahall want to force oil companies to drill
actually don’t have enough oil to make it worth drilling. Either they know that, and are trying to deceive us; or they don’t
know it, because they haven’t done their homework.
Third, if a commercial discovery is made, more wells must be drilled, to delineate the shape and extent of the deposit.
Production facilities and pipelines must be designed, built, brought to the site, and installed. Only after oil or gas is actually
flowing does the lease become “producing.”
In one example, Shell Oil and its partners leased an area in 7800 feet of water 200 miles off the Texas coast. They spent five
years exploring and evaluating the area, punched several “dry holes,” and finally drilled a discovery well in 2002. Three
appraisal wells (at $100 million apiece) confirmed a major field, and, in 2006, the company ordered a huge floating platform
and pipeline system that will initiate production in 2010. Total investment: $3+ billion.
That’s hardly “sitting on their leases.” But those leases will be “non-producing” until 2010. Clearly, a “use it or lose it” law
will do nothing to change these hard realities.
Thirteen years may sound like a long time. It is longer than usual. But compared to the decades it will take for wind power to
make a meaningful, but still unreliable, contribution, it’s nothing.
Further complications often stymie energy companies from obtaining and using leased land.
Every step in the process must be preceded by environmental studies, oil spill response plans, onsite inspections, and
permits. The process takes years, and every step is subject to delays, challenges – and litigation.
In the Rocky Mountains, protests against lease sales rose from 27% of all leases in 2001 to 81% in 2007, according to
government and industry records. Numerous additional prospects were never even offered, because land managers feared
protests.
The justification used to be endangered species. Now it’s climate change – as though U.S. oil causes global warming, but
imported oil substitutes do not.
If and when leases are issued, seismic and drilling work is often protested. Some years ago, an endangered plant held up
drilling – until companies realized the Astragalis was locoweed, which ranchers had been trying to eradicate because it
sickens cattle. This year, the excuses are drilling fluids that are 98% water and clay – and sage grouse, even though hunters
shoot thousands of them every year.
The obstructionist tactics mean hundreds of millions of dollars in lease bonuses and rentals, seismic surveys, and other
exploration work are in limbo. None of this money has been refunded to companies, and no interest is paid to the companies.
The money would pay for thousands of wells that drilling opponents say companies refuse to drill.
These lands are non-producing, not because companies are procrastinating, but because politicians and bureaucrats have
bowed to pressure from radical environmentalists, and refused to issue permits.
We don’t need a “use it or lose it” law – or more cheap rhetoric about big-oil conspiracies. Congress simply needs to allow
drilling on the 60% of onshore federal oil and gas prospects and 85% of Outer Continental Shelf prospects that it has
placed off-limits.
Furthermore, instead of a “drill it or lose it” law, we need a “permit or pay” rule:
When the government sits on permit applications for more than six
months, companies no longer have to pay lease rents; instead, they
get interest on their bonus payments and expenses to date, and
lease terms are extended.
When environmentalist groups lose their legal actions, they pay the
companies for the court costs, delays, and attorney fees.
When you go to the ballot box this fall, remember who’s really behind the outrageous prices you’re paying for the energy that
makes your job, home, car, and living standards possible.
Remember the simple solution: Stop the war on poor families. Issue leases and permits. Drill here. Drill now. Pay less.
LINKS TO RELATED TOPICS:
American Politics & Political Competition:
Elections, PACs, & Political Parties
American Government, Politics, & the U.S. Congress
The American Political System:
Politics & Government in the U.S.A.
Political Environmentalism Versus Human Progress & Prosperity:
Policy Issues Relating to Energy, Environment,
& Natural Resources
The Earth's Natural History, Global Climate Changes,
& the Future of Human Life & Civilization on the Planet:
Science, Ideology, & Public Policy
Political Economy -- Philosophies, Systems, & Public Policies:
Government, the Economy, & Economic Prosperity
Newt Gingrich, former Speaker of the U.S. House of Representatives, is Founder of American Solutions
(http://www.AmericanSolutions.com/DrillNow) and author of Winning the Future: A 21st. Century Contract with
America. Roy Innis is Chairman of the Congress of Racial Equality and author of Energy Keepers
- Energy Killers: The New Civil Rights Battle (http://StopWarOnPoor.org/).
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THE PROGRESSIVE CONSERVATIVE, USA
An Online Journal of Political Commentary & Analysis
Dr. Almon Leroy Way, Jr., Editor
Conservative & Free-Market Analysis of Government, Politics & Public Policy, Covering Political, Legal, Constitutional, Economic,
Cultural, Military, International, Strategic, & Geopolitical Issues
Conservative Government Ensures a Nation's Strength, Progress, & Prosperity