May 15, 2012 IPAA Statement on Interior Department Report on Unused Oil and Gas Leases
Attacks on American oil and natural gas producers on the grounds that existing federal leases are not being developed ignore the realities of the leasing, exploration and permitting process. This is a process created by federal law, complicated by federal regulations and used by anti-development interests to delay and discourage new American oil and natural gas production.
False accusations about oil and natural gas production are obscuring its complexity to make America’s independent producers a scapegoat for failed national energy policies.
IPAA represents more than 7,000 companies who drill 95 percent of the U.S. oil and gas wells both onshore and offshore. Our companies are in the business of supplying energy. They supply it, not sit on it. They supply energy where you want it, when you need it, every single day.
America’s oil and natural gas producers pay for the right to explore on leased land as well as a rental fee. The government is not losing money.
Leases don’t come with MapQuest directions that say, “Drill here for 50 million barrels.” Companies do develop their leases, but producing oil and natural gas requires many steps: gathering funding, exploring, getting permits, drilling, and finally producing the oil or natural gas. Then they have to be able to transport it to market. The entire process can take years. Another delay we have seen is widespread litigation from anti-development organizations.
So-called “idle” leases aren’t idle at all – leases that are in the exploration phase are considered by some to be “idle” even though companies are actively exploring for oil and gas and risking hundreds of millions of dollars in the process, such as with seismic surveys and other tests.
Many offshore leases are five years old or less – with a moratorium in between, it’s not surprising that they aren’t producing energy yet.
An oil company with a lease by law must “use it or lose it.” If energy isn’t produced within the lease term, the lease reverts to the government and the company forfeits all the money invested, which can be hundreds of millions of dollars.