U.S. House drilling on federal versus non-federal land

Serial No. 112-170. August 2, 2012. The American energy initiative part 27: A focus on growing differences for energy development on federal versus non-federal lands. House of Representatives. 171 pages.

[ Who invites these “experts”?  Will Sullivan provide deniability to congressional members when the shale gas bubble pops?  I can imagine the evening news when congressmen say in shocked tones that we had no idea there wasn’t a century of oil and gas… This is yet another drill baby drill congressional session, I’ve posted it because I want to keep track of who says we’re energy independent since that’s affecting U.S. national security and energy policy.  Alice Friedemann www.energyskeptic.com]

Dan Sullivan, Commissioner Department of Natural Resources State of Alaska: Today, our nation has by some estimates a 100-year supply of gas and the federal government is now focused on the extent to which to allow gas exports. Oil production, at 6 million barrels a day, is back to levels not seen in almost 15 years, making the U.S. the world’s third-largest producer. And U.S. natural gas production is approaching record levels. These trends are likely to continue. PFC Energy predicts that by 2020, the U.S. will be the largest hydrocarbon producer in the world exceeding Saudi Arabia and Russia. This is a bold prediction, but federal agencies back that up, estimating that the United States has more than a trillion barrels of technically recoverable oil and more than 1,000 trillion cubic feet of natural gas, including both conventional and unconventional resources.

BOBBY L. RUSH, ILLINOIS. while Democrats under President Obama’s leadership have put forth a truly all-of-the-above energy agenda, it appears that my Republican colleagues are once again taking their cue from one of their most influential leaders, Sarah Palin, and reviving their simplistic ‘‘drill, baby, drill’’ energy agenda. Merely a few hours ago, after holding a partisan vote to do away with new projects under the DOE’s loan guarantee program in the full committee yesterday, which would have invested Federal dollars into different types of renewable and clean energy projects to compete with the Republican Party favorite fossil fuel industry, the majority is here today holding a hearing on drilling on Federal versus private lands.

Never mind the fact that the Energy Information Administration has confirmed that domestic oil production in the U.S. has increased every year since 2008, that we are importing less oil than any time in the past 13 years, and that American demand is actually lower now than it was a year ago. And, Mr. Chairman, it appears that my Republican colleagues will continue to ignore the fact that the U.S. has set more than 40,000 hot temperature records this year alone, and that the last 12 months have been the hottest ever recorded in our Nation’s history. Today, fully two-thirds of the country is experiencing drought, and 30 percent of the Nation’s corn crop is in poor or very poor condition, while at the same time, water levels in four of the five Great Lakes have actually plummeted down to unprecedented levels due to high evaporation rates and insufficient rainfall.

Just yesterday the Agriculture Department designated more than half of all U.S. counties as disaster areas in 2012. The main reason? Drought. And the Agriculture Secretary Vilsack signed a disaster designation for 218 counties in 12 States just yesterday morning, bringing the national percentages to 50.3 percent.

I remind you that today, more than 113 million Americans are living under extreme heat advisories, and yet, despite repeated requests from myself and Ranking Member Waxman to hold hearings on the science behind all of the extreme weather events associated with climate change that the Nation has been experiencing, we have yet to examine this vitally important issue just one time, just once this year, one time before this subcommittee. Even former climate change skeptics such as Richard Muller, who penned in a July 28 New York Times editorial entitled ‘‘The Conversion of a Climate Change Skeptic,’’ even Mr. Muller has now come out on the record and joined the overwhelming consensus of scientists and researchers who have stated that global warming is indeed occurring, and that human causes are indeed behind it. Yet as America burns, this committee fiddles. Even as Congress prepares to vote on a bill, drought relief bill for farmers this morning, farmers who are suffering from record drought in the Midwest and beyond, even when you and I and the other members of this subcommittee, we will be casting votes sometime this morning, this very subcommittee refuses to hold one hearing, just one hearing on the causes behind these droughts, or what can be done for our Nation, for this Federal Government, for this Congress to lessen the impact of the heat on the American people. I support a recent CRS study finds that 96% of the increase in domestic oil supply since 2007 has come from non-Federal lands.

HENRY A. WAXMAN. CALIFORNIA. Today the subcommittee holds a hearing to compare oil and gas production on Federal lands to production on private lands. We will hear once again, as we just heard, that the Obama administration is hostile to oil and gas production, and we will hear once again that oil and gas production should be pursued at the expense of renewable energy and other goals. Well, that is the rhetoric. Now here are the facts. Domestic oil and gas production has increased each year of the Obama administration, and it is the highest it has ever been in 8 years. America’s dependence on foreign oil has gone down every single year for the last 3 years, and oil production from Federal lands is higher today than it was under the last 3 years of the Bush administration.

It is true that oil production on private lands has increased more than it has on Federal lands.

Some Republicans have used this as evidence that the President must be disfavoring the oil industry, but the fact is that most of the increase in domestic oil production has occurred from developing shale formations. These formations happen to be on private lands. The Federal Government manages only a small portion of these areas. For instance, the Bakken shale has made North Dakota one of the country’s top States in oil production, but Federal lands make up a small percentage of it. Even offshore oil production remains strong. In spite of one of the world’s worst environmental disasters, oil production from the Outer Continental Shelf in 2011 was equal to or higher than any of the last 3 years of the Bush administration. The Obama administration has taken many steps to facilitate oil and gas production. The Bureau of Land Management has reformed its leasing process with a tracking system for applications that shortens wait times.

But we shouldn’t lose sight of the fact that public lands are not solely for oil and gas production. Our public lands are held in trust for the American people, not the oil companies. Public lands are used for conservation, outdoor recreation, watershed protection, timber, and grazing. They can also be used for renewable forms of energy. In fact, the Obama administration recently completed an assessment that will expedite permitting for solar installations on public lands in the Southwest. This has the potential to produce enough electricity to power 7 million homes. The administration’s job is to balance these competing demands.

When you are looking at, say, a resource boom—which is what North Dakota is all about—you have to ask whether a comparable resource boom is possible in a much more populous state, or the United States as a whole. One commentator declared that there is as much oil under California as there is under North Dakota; quite possibly. The question is, how big a deal would extracting that oil be in a state with 50 times North Dakota’s population; how much difference would it make to, say, the state unemployment rate? And the answer, of course, is virtually none. To have a North Dakota-type boom in California, you would have to find 50 times as much oil; to have it nationally, you’d have to find 500 times as much. Not likely.

ED WHITFIELD, KENTUCKY. North Dakota has an unemployment rate today of around 3 percent, and so it raises the question on the energy policy and economic policy, what is North Dakota doing that is different than other States?

Alaska, where output has been declining over the same span that North Dakota’s output has been increasing. Now, the main difference between Alaska and North Dakota is that Alaska has far more areas of federally owned and controlled lands, and this administration has substantially cut back on new energy leasing in these Federal lands and offshore areas, and while that may not be the only factor that has led to this difference of unemployment and economic growth, we hope this morning to find out how substantial a factor is it.

And it isn’t just Alaska. For example, this administration has cut back on new leasing in the federally controlled Gulf of Mexico and has also been slow to issue the necessary permits for previously leased areas, and the red tape facing energy companies operating on Federal lands throughout the intermountain west has kept the region below its potential for energy production and jobs.

In contrast, relatively little land in the energy-rich Bakken formation in North Dakota is federally owned. There the oil industry has been allowed to partner with private landowners to expand production. In the last decade alone, North Dakota has risen from the eighth largest producing State to the second largest. An estimated 35,000 new direct jobs and many more indirect ones are a big part of the reason why the State’s unemployment rate is around 3 percent. In effect, North Dakota gives us a glimpse of what would be possible in many other parts of the country if only we could change some policy in Washington, DC. And I might add that gasoline prices unfortunately seem to be creeping

Mr. Michael Nedd, Assistant Director of Minerals and Realty Management at the Bureau of Land Management. Thank you for the opportunity to discuss the role of the Bureau of Land Management in facilitating responsible development of oil and gas resources from our Nation’s public land. The BLM is responsible for protecting the resources and managing the use of our Nation’s public land on over 245 million surface acres, approximately 700 million acres of onshore subsurface mineral estate, and 56 million acres of Indian trust land. We work closely with State governments and other Federal agencies in the management of this subsurface mineral estate. The BLM manages public lands on very complex, multiple use mandate from Congress, and consider a wide variety of factors in land management decisions, including industry interests, conservation value, as well as other potential use of the public lands.

In addition to oil and gas production, the BLM’s unique multiple use management of public lands also includes activities such as livestock grazing, outdoor recreation, solid minerals development, and the conservation of natural, historical, cultural, and other important resources. Secretary Salazar has emphasized that the development and production of conventional energy resources from BLM-managed public and Indian lands, are an important component of the new energy frontier and play a critical role in meeting the Nation’s energy needs. In 2011, conventional energy development from public and Indian trust land produced 14% of the Nation’s natural gas, 6% of its domestically-produced oil. In fiscal year 2011, onshore Federal oil and gas production resulted in nearly $2.9 billion in royalties, approximately half of which was paid directly to the States in which the development occurred.

The geography of resource occurrence and the relative economic attractiveness of development are key factors impacting discoveries and production level on both Federal and non-Federal lands. Currently, there are more than 37 million acres of public lands that are leased for oil and gas development. Only about 12 million acres are under production. There are huge potential oil and natural gas plays in the Marcellus, Fayetteville, Barnett, Niobrara, and Bakken shale formation where there is an abundance of oil and gas. These geological formations exist largely on State and private minerals estate. The fact that only one-third of Federal leases are in production may be partly attributable to the abundance of oil and gas in these shale formations on the State and private land and to low natural gas prices relative to the price of oil.

The BLM currently manages nearly 37 million acres of onshore oil and gas leases. In FY 2011, over 117 million barrels of oil were produced from public and Indian lands. In addition, the nearly 3 trillion cubic feet of natural gas produced from public lands made 2011 the second-most productive year for natural gas production on record. Natural gas production on BLM lands increased by 6 percent during 2009-2011, compared with 2006-2008. In 2011, conventional energy development from public and Indian lands produced 14 percent of the Nation’s natural gas, and 6 percent of its domestically produced oil. In Fiscal Year (FY) 2011, onshore Federal oil and gas production resulted in nearly $2.9 billion in royalties, approximately half of which was paid directly to the states in which the development occurred. In addition to the multiple uses of the public lands, the BLM complies with a variety of statutes that are not necessarily applicable to state or private lands, such as the National Environmental Policy Act (NEPA) and the National Historic Preservation Act.

Given the checkerboard ownership patterns of many public lands in the West, as well as the significant portfolio of split estate ownership, the BLM also must coordinate with other landowners and land managers. Of the 700 million acres of mineral estate managed by the BLM, 57 million acres are under surface acres that belong to private entities, and a significant number of acres are under surface managed by other Federal agencies. It is important that the BLM provide not only the public an opportunity to engage on these issues, but also neighboring landowners.

The National Petroleum Reserve in Alaska (NPR-A) is a vast area of nearly 23 million acres on the North Slope of Alaska that has Federal production potential. In 2010, the U.S. Geological Survey estimated that 896 million barrels of conventional, undiscovered technically-recoverable oil and 53 trillion cubic feet of conventional, undiscovered technically-recoverable gas were within NPR-A and adjacent state waters.

Mary Wagner Associate Chief, U.S. Forest Service U.S. Department of Agriculture. Thank you for the opportunity to appear before you today to provide the agency’s perspective regarding oil and gas development on the National Forests and Grasslands. We would like to describe the role of the Forest Service in oil and gas leasing and operations and provide an overall scope of the oil and gas program on the National Forest System (NFS) lands. The Forest Service is committed to doing its part to foster and encourage private enterprise in meeting the nation’s energy needs, while at the same time protecting the landscapes and watersheds for present and future generations. Oil and gas development is one of a variety of renewable and non-renewable energy development activities authorized on the National Forests and Grasslands. NFS lands provide 25% of the nation’s coal production and 16,000 megawatts of hydropower generation capacity, enough to power twelve to sixteen million homes. The Forest Service authorizes uranium mining, geothermal development, and biomass removal for power generation. The Forest Service also authorizes a number of active mines which produce minerals needed for energy development and transmission (such as copper). The agency also authorizes thousands of miles of electric transmission and pipelines that distribute energy to market. Specific to oil and gas, we have authorized almost 20,000 active wells on NFS lands in 19 states. While all of these wells are located on surface managed by the Forest Service, their production may be from either federally-owned or privately-owned, sub-surface minerals. In 2009 and 2010, oil and gas production from federally-owned minerals on NFS lands generated an estimated $136 million and $186 million respectively in bonus and royalty payments to the U.S. Treasury. In 2010, this production had a market value of $1.2 billion,

A large portion of the royalty revenue is collected for and delivered to states and counties. Specifically 25 percent of the revenue from Acquired Lands, which includes the National Grasslands, as well as 50 percent of the revenue from Public Domain lands, is delivered to the states and counties. Almost three-fourths of the approximately 20,000 wells on NFS lands overlie subsurface mineral estate that is privately held. This “split estate” development predominately occurs on NFS land in the east. The majority of these wells are low volume producers with typical depths between 2,000 and 3,000 feet which require small areas of surface occupancy (pads) of an acre or less. National Forests in the east also have significant development potential for shale gas. We

Although most of the oil and gas wells on NFS lands are in the east, most of the oil and gas production is in the west; most notably in the Williston Basin with its Bakken Formation in North Dakota on the Dakota Prairie National Grassland, and the San Juan basin in northwestern New Mexico on the Carson National Forest. It is common practice in these areas to utilize larger pads (typically 3-5 acres) to drill multiple wells to minimize the surface “footprint” of development. On the Dakota Prairie National Grasslands, we approved 14 surface use plans of operation in 2008, 13 plans in 2009, 29 plans in 2010, and 36 plans in 20) I. One of the challenges in being responsive on the Dakota Prairie National Grasslands has been our ability to hire, provide housing and retain employees to work in the same geographic area which is experiencing the oil and gas boom. We are working diligently to address this challenge. There are a number of factors which influence where, when, and how oil and gas is developed on NFS lands. The level of interest from industry is largely a function of available supply as well as the economics of development, from prices to the cost of extraction. This cost is highly variable and depends upon the deposit, drilling technique to access the deposit, and transportation costs among many other factors.

ADAM SIEMINSKI, EIA. Federal offshore natural gas production has been on a downward trend for the last 9 years, falling by more than 50%, as commercial development moved from the gas-prone shallow shelf areas in the Gulf of Mexico to the richer oil-prone deep waters further out in the Gulf. Production from onshore Federal lands was generally growing over this period and actually exceeded the offshore production by 2008.

EIA estimates for the non-Federal oil production are based on monthly data from State agencies and purchased third-party data. The lag from when the data are first reported to the time that they stop changing significantly varies from State to State. A few States, like North Dakota and Alaska, report relatively complete data within 2 months of the close of the production month. Other States with large numbers of producers, like Texas and Oklahoma, can take a year or two to report complete data. For the Federal offshore area, EIA relies on the metered data from the Department of the Interior.

Unlike oil production, EIA collects data on natural gas production from about 240 operators each month. This EIA survey primarily covers five States and the Federal offshore Gulf of Mexico. Though more accurate than the oil production estimates, the current natural gas monthly production survey does not collect data on Federal lands or from some of the emerging shale States like Arkansas and Pennsylvania. In its Federal year, fiscal year 2013 budget, EIA has proposed a small increase in funding to improve the timeliness and accuracy of all of the oil and natural gas production data. This proposal would increase data quality as well as enable EIA to identify and report these trends affecting the Nation much sooner.

Dan Sullivan, Commissioner Department of Natural Resources State of Alaska. A few years ago, many believed our nation was running out of the natural resources needed to power our economy. Indeed, since the oil shocks of the 1970s, a sense of chronic energy scarcity and vulnerability has dominated American thinking. But recent innovations in unconventional oil and gas extraction have upended the conventional wisdom. Hardly a day goes by without fresh evidence of the United States regaining its status as a hydrocarbon superpower. A few years ago, we were preparing for large-scale natural gas imports due to diminishing supplies. Today, our nation has by some estimates a 100-year supply of gas and the federal government is now focused on the extent to which to allow gas exports. Oil production, at 6 million barrels a day, is back to levels not seen in almost 15 years, making the U.S. the world’s third-largest producer. And U.S. natural gas production is approaching record levels. These trends are likely to continue. PFC Energy predicts that by 2020, the U.S. will be the largest hydrocarbon producer in the world exceeding Saudi Arabia and Russia. This is a bold prediction, but federal agencies back that up, estimating that the United States has more than a trillion barrels of technically recoverable oil and more than 1,000 trillion cubic feet of natural gas, including both conventional and unconventional resources.

This entry was posted in Energy Independence and tagged . Bookmark the permalink.

Comments are closed.