U.S. SENATOR KEN SALAZAR, Congressmen Nick Rahall and Mark Udall, House Speaker Nancy Pelosi, Colorado Gov. Bill Ritter and other politicians 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 left-wing base. 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. Salazar, Udall, Pelosi, Rahall, Ritter and fellow drilling opponents accuse the oil industry of “sitting on” 68 million acres of “nonproducing” leased land. They want to force energy companies to “use” this leased land within 10 years, or lose all exploration and drilling rights.
America can only hope this proposal is a clumsy attempt at political jujitsu. The alternative is that the politicians who set energy policy today 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-Salazar-Rahall- Pelosi-Ritter “solution” effectively duplicates current law.
Second, and more disturbingly, the groundless accusations of these politicians and their proposed solution relies 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. 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 these politicians 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.
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.”
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 percent of all leases in 2001 to 81 percent 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.
Where leases are issued, seismic and drilling work is often protested. This year, the excuses are drilling fluids that are 98 percent 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, big-oil conspiracies. Congress simply needs to allow drilling on the 60 percent of onshore federal oil and gas prospects and 85 percent 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 environmental 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: Issue leases and permits. Drill here. Drill now. Pay less.
Editor’s Note: Meredith Carroll is on maternity leave.
Roy Innis is the national chairman and chief executive officer of the Congress of Racial Equality. NEWT GINGRICH is the former Speaker of the House of Representatives.
Originally published in the Santa Monica Daily Press print edition on August 28, 2008. Read the original PDF.