Report: Gulf drilling low

05 16, 2012 by The Advocate

Only about 20 percent of the areas of the Gulf of Mexico’s Outer Continental Shelf that are leased for potential oil and gas drilling are under production, according to a new lease utilization report Tuesday from President Barack Obama’s Interior Department.

The report comes during a presidential election year in which Republicans in Louisiana and nationally have repeatedly attacked the president for alleged delaying tactics and slow permitting for oil and gas drilling in the Gulf since the 2010 BP oil leak.

Interior Secretary Ken Salazar said that next month 38 million acres in the central Gulf will become available during a new lease sale.

“We continue to offer new areas onshore and offshore for leasing, as we have over the last three years, and we also want companies to develop the tens of millions of acres they’ve already leased but have left sitting idle in order to further reduce our reliance on foreign oil as quickly as possible,” Salazar said in a statement accompanying the report.

Out of 32 million acres leased in the Gulf’s Outer Continental Shelf, 10 million acres are approved for exploration or development and only 6.4 million of the acres are in production, according to the 23-page report.

Sen. David Vitter, R-La., responded that the administration is again focusing on “liberal talking points.”

“Often because of Interior regulations, these lands sit ‘idle’ and paying into the (U.S.) Treasury until they can move forward,” Vitter said.

Sen. Mary Landrieu, D-La., argued the federal government must enact more “straightforward and efficient” permitting in the Gulf.

“In order to make the sizeable investments needed to safely produce the energy our country needs, reduce our dependence on foreign oil, and lower prices at the pump, we must have commonsense reforms in order to put the Gulf Coast back to work,” Landrieu said.

The Interior Department contends the central Gulf is its No. 1 energy production priority with an area estimated to hold close to 31 billion barrels of oil and 134 trillion cubic feet of natural gas.

Louisiana Oil and Gas Association President Don Briggs said he hopes the June lease sales move forward as planned.

Briggs also criticized Tuesday’s report for showing the Obama administration does not understand how leasing and Gulf oil and gas production works.

“It takes years to develop (leased) properties,” Briggs said, arguing leases are revoked if companies do not produce.

That is why close to 40 percent of today’s production comes from leases lost and re-leased, he said.

The American Petroleum Institute contends out of every 100 leases in the Gulf Outer Continental Shelf, there are about 11 drillable prospects and only one major discovery.

Oil production often does not occur until about 10 years after the lease sale because of the amount of time required for exploration and the complicated setup and drilling procedures in deepwater areas, the API argues.

“It is not uncommon for a company to spend $100 million to drill a well and find no oil or gas,” according to a 2011 API fact sheet. “Moreover, companies drill more wells that have no oil or gas than wells that actually do.”

Briggs said the administration should just stick with the leases and regulations.

“If they paid for the lease, then what else matters?” Briggs said. “The federal government is still getting their money. If they (companies) decide not to drill, then that’s their business.”