By Steve Maley
Texas Insider Report: WASHINGTON D.C. The White House pushed back last week against the oil & gas industrys
claims that the Obama administration is blocking domestic energy development releasing a new analysis showing that 46 million acres of federal lands and waters leased for drilling are sitting idle. President Obama and Interior Secretary Salazar returned to familiar territory again chastising energy companies for maintaining an inventory of undrilled Federal leases.
According to the Department of Interior report oil and gas companies are actively drilling or have launched development on less than a third of the 36 million acres they have leased offshore and on just over half of their onshore leases.
With gasoline prices and the economy looming large at the ballot box this year the administration has been emphasizing its commitment to an all of the above" energy policy and especially touting its support for domestic natural gas production.
We continue to make millions of acres … available for safe and responsible domestic energy production on public lands and in federal waters" said Interior Secretary Ken Salazar in a statement. We also want companies to develop the tens of millions of acres theyve already leased but have left sitting idle."
So shut up and drill the leases you already have!
In this post I will try to demonstrate just how disingenuous that position is.
Over at the
website of energy consultant Wood Mackenzie I found an oil and gas map of the Gulf of Mexico that will help illustrate my point:
Lo and behold all acres were not created equal. Oil and gas in the Gulf of Mexico province do not occur everywhere but only where there is a serendipitous confluence of geologic factors: favorable structures permeable rocks and some kind of trap to keep the oil or gas from escaping.
Other observations:
- Most of the prominent and promising geologic features have already been drilled.The structural framework of the Gulf of Mexico is fairly well understood. Future drilling may find new fields in between the ones that have already been found but in general they are deeper less prominent and more risky than the ones discovered earlier.
- Something like 90 of the area is non-productive. If you blindly throw a dart at the map 9 out of 10 times you will not strike oil or gas. Explorationists use highly detailed seismic surveys to gain a precise structural understanding of a prospective area. A 200 foot error in placement of a well could mean the difference between a discovery and a dry hole.
- Given the current low market prices for natural gas few operators are looking for gas prospects. That further limits the area which is prospective for oil but many of those blocks containing gas prospects are already under lease. Those leases were entered into by the operator when the price of gas was much higher but they are no longer economically attractive. They still count against the undrilled leases" statistic.
Obama challenges oil companies to drill existing leases
