The People of America's Oil and Natural Gas Indusry

Your Energy Questions - Answered

Mark Green

Mark Green
Posted April 1, 2011

On Wednesday, after the President's speech on energy the following tweet popped up in our Twitter stream:

@whitehouse - Hey, Heather Zichal here with the WH to take your energy questions, send them along

And people did, quite a few actually. The White House team was unable to get to all of them, understandably, so we have decided to help them out. But first we have to address a gross inaccuracy in one of the five answers that they did provide. @wilcoxgolf asked:

@whitehouse why do you not drill in the US? We have enough oil!

to which the White House responded:

@willcoxgolf Last year US oil production reached highest level since 2003, oil cos. sitting on many unused leases http://wh.gov/a2u

The last part is simply not true. The administration only can make this statement by defining action on leases as inaction. Virtually all leases are in stages of research, analysis, financing, exploration or development. Companies manage lease portfolios with a view to making the billions of dollars they invest in them pay off. There is no financial incentive to pay for and then sit on leases, which must, under current law, be turned back to the government if not producing within specified periods. Companies evaluate every tract to determine if it has economically recoverable resources (most don't) and develop those that do. When companies determine leases have little or no promise, they return them to the government. Shortening leases and raising royalty rates will not speed development, which takes years. These are not "incentives," as the administration mislabels them. They are disincentives, which will discourage future investment in new leases and reduce future domestic production. More here on that.

Regarding oil production, last year's production increase relates to decisions made in the Clinton and Bush administrations - and has little to do with decisions made by the current administration. Oil and natural gas development takes years. The U.S. wells producing oil in 2010 operate largely under leases and permits that precede the Obama administration. More important, the administration is selectively using annual figures that obscure the facts. Monthly data indicate that domestic offshore production has been in decline since May 2010 and is expected to further decline in 2012, according to the administration's own estimates. Overall domestic oil production has remained relatively steady due to onshore production growth in areas like North Dakota, where much of the new production is on private lands not controlled by the administration.

Now on to some more.

@MissMilano1 - @whitehouse President Obama has a great energy plan when may we expect to see progress? And what major changes will we notice?

We agree with the administration that producing more oil at home must be part of the nation's energy strategy. Oil and natural gas supply most of the nation's energy and will continue to for decades, according to the administration's own projections. However, the administration's energy strategy on oil would result in less U.S. oil produced, fewer U.S. jobs created, less energy security, and less taxes and royalties going to our federal treasury. So the changes you will notice, sadly, are the opposite of progress.

@TheCleverTwit - @whitehouse The oil companies have money and power & control the energy dialogue. Why not incentivize big oil developing green energy? #WH

You flatter us. If we controlled the energy dialogue you would know that the oil and natural gas industry has invested $194 billion since 1990 toward improving the environmental performance of its products, facilities and operations; and invested $58.4 billion in low and zero-carbon emissions technologies from 2000 to 2008--more than either the federal government or all other U.S.-based private industries. Improved efficiency and more alternative energy are good. And as you can see our industry invests heavily in both. But to encourage oil development off Brazil's coasts, as the administration recently did, or elsewhere in the world while placing obstacles in the way of development here at home needlessly damages our economy, lessens our energy security, and potentially sends American jobs overseas.

@EnergyAssetBob - @whitehouse why doesn't anyone focus on biomass power, a renewable, carbon-neutral, baseload source, when formulating energy policy?

We need all fuels. Demand is growing. We can't afford to pick and choose. We do not need "alternatives to oil." We need alternatives and oil. And we need to make sure that policies put in place to promote or mandate alternatives are realistic and workable. For example, the administration has put consumers at risk by prematurely approving higher per-gallon blending limits for ethanol in gasoline before testing was completed.

@CorinneAM - @whitehouse Why is the WH policy statement so weak on fracking?

Not sure but you mean by "weak," but you should know that the industry supports transparency that protects proprietary information and that EPA and other studies of hydraulic fracturing show it does not present a threat to groundwater quality or supply. Hydraulic fracturing is a tried-and-true, much studied and evaluated 60-year-old technology critical to the development of the nation's natural gas reserves. State regulation of the technology is robust and more than adequate. More federal involvement could hamper future energy production with little environmental benefit.

Well, I'll follow the White House's lead and limit this to five answers, for now. Will get to some more soon.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.