The Results Are In: Drilling Down On Unused Leases

On March 11, 2011, President Obama directed the Department of the Interior (DOI) to determine the acreage of public lands (onshore and offshore) that have been leased to oil and gas companies and remain undeveloped, noting that companies should be encouraged to produce energy from leases that they are holding. Today, the results are in. 

The report reaches several important conclusions: first, although the Department of Interior has made available significant acreage for resource development over the past two years, substantial acreage has not been leased by industry. Secondly, there are tens of millions of acres that are currently under lease that remain idle. Because these areas are not undergoing exploration, development, or production, taxpayers are not getting the full advantage of America’s resource potential. When it comes to onshore oil and gas development, nearly 57 percent of all leased acres are inactive – meaning they are neither being explored nor developed.  In total, 22 million leased onshore acres – acres already in the hands of oil and gas companies – are not being used. That’s roughly the size of Indiana.

Use of offshore leases is even more striking. Over 70 percent of the tens of millions of offshore acres under lease are inactive. In the Gulf of Mexico alone, there are nearly 24 million inactive leased acres. That’s about the size of Kentucky. DOI estimates that this area includes approximately 11.6 billion barrels of oil and nearly 60 trillion cubic feet of natural gas.

The numbers speak for themselves:

Onshore

• Acres offered for lease between January 2009 and March 2011: Over 6 million
• Acres leased by companies between January 2009 and March 2011: Fewer than 4 million
• Total acres under lease (as of March 2011):  More than 38 million  
• Total leased acres that are inactive (as of March 2011):  nearly 22 million
• Percent of leased acres that are inactive: 57%

Offshore

• Acres offered for lease in 2010: Nearly 37 million
• Acres leased by companies in 2010: 2.4 million
• Total acres under lease (as of March 2011):  Nearly 38 million
• Total leased acres that are inactive: More than 27.5 million
• Percent of leased acres that are idle (as of March 2011): 70%

Complementing the Administration’s ongoing commitment to safe, responsible, and efficient development and production

It has been less than a year since the largest oil spill in U.S. history. In that time, this Administration has worked aggressively to implement unprecedented new safety and environmental standards that build on the lessons learned from the Deepwater Horizon oil spill. Contrary to misleading claims, production has continued. Following the development of important new standards, the Department of the Interior (DOI) has worked with industry to ensure they meet the standards, and as a result has to date issued 39 permits for new shallow water wells.  In February, oil companies were finally able to develop the first deepwater containment systems – designed to contain spills if the worst happens, as it did in the case of the Deepwater Horizon. Based on that ability – evaluated on a case-by-case, permit-by-permit basis –since February 28th, DOI has issued seven deepwater drilling permits for six unique wells. Each permit needed to comply with all of the new standards, including demonstrating that they could contain an underwater oil spill like the one that released 4.9 million barrels of oil into the Gulf of Mexico just last year. This is in addition to the 28 deepwater permits that have been approved for types of activities, such as water injection wells and drilling from a fixed rig with a surface BOP, that were allowed under the moratorium.

Onshore permitting continues at a consistent pace, with 5,237 permits issued last year.   In fact,  in the last two years onshore permit applications have been processed at a faster rate than they have been received – decreasing the backlog of applications.