The Drilling Question

July 26, 2008

As gasoline prices in America passed $4 a gallon, a strident, largely Republican chorus has endlessly repeated a series of talking points that go something like this:

1)     We have plenty of oil and gas that we’re not extracting from federal/public lands and waters;

2)     Current prices are caused by the fact that some of these areas are currently off limits;

3)     Opening these areas up to exploration and drilling is the solution to high prices.

Are these claims true? Fortunately, with Democratic control of Congress, policy is being driven by investigations into actual facts, rather than talking points.

A June 2008 report[1] by the Majority Staff of the House Committee on Natural Resources, chaired by Representative Nick Rahall, examined these issues and reached the following conclusions.

Energy Companies already lease large areas of federal lands that they are not utilizing.

47.5 million acres of on-shore federal lands are currently being leased by oil and gas companies. 13 million acres of these are actually “in production.”

44 million acres of offshore federal waters are currently leased. 10.5 million acres are currently producing oil or gas.

The combined acreage of federal lands and waters that are leased by private companies but not in production totals nearly 68 million acres.

The report extrapolates from current production rates on federal lands and waters that are active to estimate that the inactive 68 million acres of leased federal land and waters could produce an additional 4.8 million barrels of oil and 44.7 billion cubic feet of natural gas each day.

By the House report’s estimate, this would nearly double total U.S. oil production, and increase natural gas production by 75%, cutting U.S. oil imports by more than a third. It would also be more than six times the estimated peak production from the Arctic National Wildlife Refuge, one of the two protected areas – along with parts of the Outer Continental Shelf (OCS) – that Republicans are most insistent on opening up for exploration and drilling.

The vast majority of federal oil and gas resources are already available for development.

The report quotes the federal Mineral Management Service figure that 82% of the natural gas and 79% of the oil believed to lie beneath the OCS are located in areas that are already open for leasing.

A recent report from the Department of the Interior is also cited, stating that only 38% of the oil and 16% of the natural gas on federal lands is excluded from leasing – largely because they lie under National Parks and wilderness areas with important scenic, recreation, and wildlife values.

Opening up the Arctic National Wildlife Refuge would not have a major impact on America’s energy use – or solve its energy problem.

Republicans have fixated on opening the Arctic Refuge to exploration and drilling, largely because environmentalists are opposed to it, and President Bush has made it a centerpiece of his energy “policy.”

They neglect to mention that there are another 91 million acres currently open to leasing in the Arctic region of Alaska. Oil companies have leased 11.8 million of these acres so far. Within the National Petroleum Reserve in Alaska, oil companies have leased 3 million of 22.6 million available acres, but no production has occurred on any of those lands.

But what impact would opening the Arctic Refuge have?

The House report quotes the conclusion by the Energy Information Administration (EIA), part of the U.S. Department of Energy, that opening up the Refuge would not significantly affect U.S. oil production or prices, which are set on the world market. They estimate that if the Refuge were opened today, it would take 8 to 10 years before production would begin, and another 20 years before the estimated peak of 780,000 barrels a day would be reached. (The U.S. currently consumes over 20 million barrels a day.)

The EIA also concluded that production from the Arctic Refuge would reduce U.S. crude oil imports by a few percentage points from 2022 to 2026, but that production levels would start to decline soon after that.

A follow up report from the House Committee on Natural Resources[2] stated that the amount of oil that could be produced from reserves from federal waters offshore already available for development would be 10 times the amount that could be produced from opening up the Arctic Refuge.

The real debate, then, is not about drilling or not on federal lands and waters, or about utilizing America’s domestic energy reserves or not. The vast majority of these areas – which are owned by the American people – are already open to production.

The real debate is about whether America will have an energy policy based on rational, fact-based planning, or one based on propaganda designed to benefit a powerful interest lobby.

Contrary to Republican rhetoric, Congressional Democrats are not opposing all production, as can be seen in the following amendment offered to the “Energy Speculation Bill” that was recently debated in the Senate.

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Last modified: 08/01/08