Washington, DC – Today the Institute for Energy Research released a chart that debunks the myths surrounding the development of federal leases. As Russia threatens Europe’s oil pipeline in Georgia and Iran threatens to cutoff Middle East oil at the Strait of Hormuz, America’s energy and economic security depend on understanding the reality of domestic energy development, says Institute for Energy Research President Tom Pyle.
Democrats, though, are blocking access to US energy resources with phony claims that oil companies are just sitting on 68 million acres of untapped leases and don’t require access to new areas, he says. To strike home that message, they want oil companies to lose leases that are undeveloped within 10 years.
Pyle points out: “The reality of energy production is that it is much like hunting for a needle in a haystack. For every 60 leases permitted, you get at best one potential well. Oil companies aren’t just sitting on leased land that could be in production. Many of those permits are in various stages of development from the research stage to the environmental assessment stage to production. In the best case scenario, with all 68 million acres, the maximum acreage actually likely to produce oil is 113,000 potential wells.”
“This is why it is critical that the U.S. open more of our resources to drilling, so the best and most economically feasible fields can be developed. The notion that oil companies are just sitting on oil leases is a myth.” Pyle added. “At a time of high oil and gasoline prices and increased energy insecurity, politicians need to become fully educated about the realities of energy development, not engage in sound bite campaigns on bogus claims about them.”
Fact: Lease agreements already contain federal requirements 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.
Fact: Oil exploration is a long, complex, arduous, risky and expensive process. It starts with a proposal about what type of geologic structures could potentially hold this vital resource. Based on that idea, companies purchase leases: agreements that allow them to test their ideas, and hopefully find and produce oil and gas from leased properties.
Fact: 60 leases translates into: 50 leases with potential for oil and gas, 25 actual prospects, and only 11 drillable prospects and ultimately only 1 actual well that may produce oil or gas. If we are talking about 68 million acres of inactive leased land that means at best we have 113,000 potential wells.