Western Energy Alliance Answers Accusation of Non-Producing Leases

May 15, 2012

(DENVER) - The Administration is again rehashing tired rhetoric that industry is not developing on existing leases while failing to mention the huge obstacles it places in the way of oil and natural gas producers. Companies have proposed twenty major projects that could create 120,905 jobs, $8 billion in wages, and $27.5 billion in economic activity, yet little progress has been made because of federal government delays.

"The Administration continues to deflect blame for leases that are not producing onto the industry, yet their rhetoric displays a misrepresentation of how oil and natural gas development on federal lands works," said Kathleen Sgamma, Vice President of Government and Public Affairs. "We estimate that about half the nonproducing acreage results from the Department of the Interior's (DOI) own redundant regulations and bureaucratic delays."

Currently, government delays of three to seven years are preventing fourteen significant projects from moving forward on federal leases. By developing just 1,631 wells per year, these projects could create 64,805 sustained jobs, $4.3 billion in wages, and $14.9 billion in economic impact annually. However, even once projects are finally approved after several years, companies then must wait 298 days on average for a permit, so the delays continue.

"Not all leased acreage is created equal: some simply does not have recoverable oil or natural gas resources," continued Sgamma. "There will always be some percentage of leased acreage that will not be developed by the current leaseholder with today's technology because exploratory work determines there is insufficient economically recoverable energy.

"If the Administration is really concerned about undeveloped leases and increasing domestic energy production, it would direct DOI to move forward with projects that companies have already proposed, and roll back some of the layers of bureaucratic red tape now imposed on western energy producers.

"The truth is that companies are doing all they can to develop federal energy resources, but a lease is not a green light to produce—it's a definite maybe and the first step in a long, expensive process fraught with bureaucratic red tape," concluded Sgamma.

Click here to read Economic Impacts of Oil & Gas Development on Federal lands in the West.

Click here for the Onshore Process Position paper.


About Western Energy Alliance
Western Energy Alliance, founded in 1974 as the Independent Petroleum Association of Mountain States, is a non-profit trade association representing 400 companies engaged in all aspects of environmentally responsible exploration and production of oil and natural gas in the West. More information on Western Energy Alliance and its members is available at www.westernenergyalliance.org.