Posted January 15, 2015
Charting some of the latest Bureau of Land Management (BLM) data on federal oil and natural gas activity – which mostly shows continuing decline.
First, BLM issued fewer new oil and natural gas leases in fiscal year 2014 than in any year since FY1988:
That year 9,234 new leases were issued, a number that fell to 1,157 in FY2014. Last year’s number was a retreat from FY2013, when 1,468 new leases were issued. Below, the recent trend (FY2009-2014) in new leases issued:
Other indicators also show declining oil and natural gas opportunity in areas controlled by the federal government. The number of leases in effect has fallen from 53,431 in FY2009 to 46,183 in FY2014 …
… and the total number of acres leased, falling from 45.3 million acres in FY2009 to 34.5 million acres in FY 2014:
This data reinforces the most recent congressional analysis showing declining energy production in federal areas – crude oil down 6 percent 2009-2013 and natural gas down 28 percent. This, even as production on state and private lands increased over the same period – crude up 61 percent, natural gas up 33 percent. This is the backdrop for industry requests to increase access to oil and natural gas reserves on federal lands – onshore, but also offshore, where 87 percent of federal offshore acreage is off limits to energy development.
Interestingly, BLM pushed out a different take on its statistics, asserting that the agency provided drilling permits and leasing opportunities “in excess of industry demand.” It said it offered nearly 5.7 million acres at 26 lease sales across the West in FY2014, with one in five attracting bids. It’s true that slightly more acreage was leased in 2014 over 2013 and that the number of producing leased ticked up a bit as well. But these other metrics show a less-than-rosy reality.
In excess of industry demand? While an area might be offered for leasing, that doesn’t automatically make it attractive for oil and natural gas development. The geology might not be right. Or, if even if there’s energy to be found it might be easier, because of federal red tape, to look instead on state and private land. In that context, BLM talking about “in excess of industry demand” is a little like a car dealership trumpeting all of the cars it didn’t sell.
Another reality, this time concerning drilling permits “in excess of industry demand”: Industry needs operational flexibility to deal with changes in situations. More leases are bought than are developed, and more drilling permits are secured than actually used.
Going back to BLM’s data, approved drilling permits in FY2014 were 48 percent higher than the number of wells started or spudded – 3769 vs. 2,544. The average difference in those two data sets from 2000 to 2014 is 46 percent, so FY2014 was an average year – not really “in excess of industry demand.”
The larger point here is the trajectory of the charts above – down in the categories that really matter, those that illustrate access to federal areas that are prime for production. If the U.S. is to have a true all-of-the-above energy strategy, there must be greater access to areas under Washington’s control that hold the energy the country needs.
Mark Green joins API after spending 16 years as national editorial writer in the Washington Bureau of The Oklahoman newspaper. In all, he has been a reporter and editor for more than 30 years, including six years as sports editor at The Washington Times. He lives in Occoquan, Virginia, with his wife Pamela. Mark graduated from the University of Oklahoma with a degree in journalism and earned a masters in journalism and public affairs at American University. He's currently working on a masters in history at George Mason University, where he also teaches as an adjunct professor in the Communication Department.
Energy Tomorrow is a project of the American Petroleum Institute – the only national trade association that represents all aspects of America’s oil and natural gas industry – speaking for the industry to the public, Congress and the Executive Branch, state governments and the media.