A Project of The Annenberg Public Policy Center

Unused Offshore Potential?


Q: Are the Democrats correct in stating that oil companies are leasing 68 million acres in the U.S. that are not being used?

A: Not exactly. More than 4,700 new holes are being drilled on current onshore leases.

FULL QUESTION

Are the Democrats correct in stating that oil companies are leasing 68 million acres in the U.S. that are not being used?

FULL ANSWER

Republicans, including presumptive GOP presidential nominee John McCain, have been arguing that the federal ban on drilling for oil on certain offshore lands should be lifted. President Bush, in fact, repealed the presidential ban on such drilling on July 14; Congress would still need to remove its restrictions before the land would be available for exploration. Many Democrats disagree with such plans, and they have been saying that the oil companies already have more land than they know what to do with.

On June 24, Democratic presidential candidate Barack Obama used this argument in a speech in Nevada:

Obama (June 24): The oil companies already own drilling rights to 68 million acres of federal lands, onshore and offshore, that they haven’t touched. 68 million acres that have the potential to nearly double America’s total oil production.

The charge has been repeated by Nancy Pelosi and others in his party.

Unused Acres?

According to the U.S. Department of the Interior’s Mineral Management Service, there are nearly 68 million acres of federal lands (onshore and off) that are part of non-producing leases as of fiscal year 2007. This is in contrast to 25.7 million acres of leased lands that are producing oil. So, there are 68 million acres of leased land on which companies aren’t extracting oil, but Obama went too far when he said oil companies "haven’t touched" them. As Bureau of Land Management Petroleum Engineer Bill Gewecke, who manages the onshore sites, told us, he "wouldn’t say untouched, [I] would say undeveloped."

That’s because these leased lands that don’t contain productive drilling operations likely are not lying idle as Obama implies. There are a lot of steps and procedures involved in setting up a productive oil well on leased land, both onshore and off. The Bureau of Land Management’s Web site lists the regulatory hurdles that need to be cleared as part of the larger five-step life cycle of a well. The path to setting up an offshore drilling operation is even longer, as shown in a large flow chart developed by the MMS.

And there is a lot of activity occurring on leased lands that does not qualify as "production." For 2006, the BLM reported that there were 77,257 productive holes onshore in the U.S. Beyond that, there were 6,738 applications for drilling permits, 4,708 holes in which companies had begun drilling and 3,693 where drilling had ended among onshore lands. That’s a total of more than 15,000 holes that were being proposed, started or finished that do not count as "productive" holes. And that doesn’t even include holes that might have been continually drilled throughout the year for exploratory reasons.

It’s not known how much of that drilling is taking place on leases currently classified as "non-producing" and how much is taking place on leases that are already producing oil. BLM’s Gewecke told us that the agency does not track acreage that is being developed or explored. And Andy Radford, an analyst with the American Petroleum Institute, an industry trade association, told us that the oil companies are "very secretive about announcing where they are testing, exploring and thinking of drilling because the industry is very competitive."

— Justin Bank

Sources

Majority Staff, "The Truth About America’s Energy:Big Oil Stockpiles Supplies and Pockets Profits," House Committe on Natural Resources. June 2008.

"Total Producing and Non-Producing Leases: Fiscal Year 2007," Mineral Management Service. Accessed 2 July 2008.

Van Wagener, Dana, "Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf," Energy Information Administration. Accessed 2 July 2008.

"Inventory of Onshore Federal Oil and Natural Gas Resources and Restrictions to Their Development," U.S. Departments of the Interior, Agriculture, and Energy. 2008.