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‘Study Proves Energy Boom Is Happening in Spite of Obama’



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Well, not quite, but that is how a lot of people will surely read it. The Congressional Research Service has released a report finding that, as was already generally known, U.S. oil and gas production has increased substantially over the past four years, but on private lands only, while it’s actually declined on federal land. The Hill reports:

House Republicans said a Congressional Research Service (CRS) study made public Tuesday backs up claims that President Obama’s policies have handicapped oil-and-gas production on federal lands.

The study by the nonpartisan CRS concluded that while overall United States oil-and-gas production has increased since 2007, it has declined considerably on federal lands.

The findings play into GOP arguments that the domestic U.S. energy boom has occurred in spite of Obama. They have urged the White House to loosen restrictions on energy drilling in hopes of driving economic activity, generating federal revenues and creating jobs.

“Where the states have been in charge, we have seen energy development boom in a safe and responsible way, but under federal control we have seen a sharp decline in production. A web of red tape and a backlog of delayed permits are blocking important energy production opportunities on federal lands,” Rep. Ed Whitfield (R-Ky.), who chairs the House Energy and Commerce Subcommittee on Energy and Power, said in a Tuesday statement.

Republicans have prodded Obama to emulate the activity on private and state lands, where a bulk of the nation’s drilling is occurring.

They say expanding energy development could yield more situations like North Dakota’s Bakken formation, where drilling has added thousands of jobs.

While Republicans have criticized Obama’s position on drilling, the president has often responded that oil-and-gas drilling has spiked under his watch. The White House, along with congressional Democrats, contends it has opened a majority of proven oil-and-gas reserves on federal lands to drilling. The administration has kept the rest, both offshore and onshore, closed off largely for environmental reasons.

So how much are the president’s policies really to blame for this result? Partially, but not entirely. For one, private lands account for the explosion in overall oil-and-gas production because the regions with the best resources for the shale and fracking boom just happen to be private. The key areas for this energy renaissance — the Marcellus Shale in Appalachia, the Eagle Ford Shale in Texas, and the Bakken formation in North Dakota — are situated where the federal government owns comparatively little land (North Dakota, for instance, where shale oil is exploding, is just 7.3 percent owned by the federal government, much less than its western neighbors). Republicans’ demands, then, that production on federal lands “emulate the activity on private and state lands, where a bulk of the nation’s drilling is occurring,” don’t really make sense, because the federal government just doesn’t own much land in the places where the “bulk” of the boom is occurring. The federal government actually can’t slow down the boom much because, lucky for American energy consumers, the feds exercise limited control over the places where shale oil and natural-gas fracking has opened up huge new reserves.

The second point, though, is that the gap between federal and private production is real — but most of it’s just happening offshore. The vast majority of oil production and much of the natural-gas production on federal tracts is offshore, and offshore production of both is down significantly. This trend of offshore decline and its role in lower federal production is pretty clear in the CRS’s report, which explains that both federal-land production and offshore production both steadily increased until they peaked 2010, when the Deepwater Horizon spill happened and the Obama administration cracked down on offshore drilling, supposedly only temporarily. (Shell’s failures in trying to develop federal waters in the Arctic haven’t helped offshore drilling or federal numbers, either.) There are plenty of good reasons to oppose the broad moratoria and new regulations put in place since the Gulf oil spill, which have hindered federal and offshore production, but that’s what’s explained the decline in production on federal lands — it’s unrelated to federal policies about fracking or the shale boom.

That said, even though most petroliferous federal property is offshore and the best shale land is private, federal policies haven’t been irrelevant to the fracking/shale boom, since there of course are plenty of new exploitable onshore that require federal permits. One friend who works in oil-and-gas leasing across the West explained to me that “people have plenty to do” right now, and are simply deciding not to bother with federal permitting for what would be profitable federal shale leases. But that isn’t because the Obama administration has made federal permitting so onerous — it’s hardly surprising that private or state land is, ceteris paribus, easier to develop than federal land, and has been for awhile. Even some private shale land is currently being neglected simply because there isn’t enough extraction capacity (though there is plenty of financial capital).

Of course, it’s still important to push for more sensible federal policies, including more efficient and easier permitting, that will allow us to take full advantage of the shale boom. The CRS points out an interesting related dynamic: Because an energy-reform bill passed in 2005 and probably because they’ve been receiving significantly fewer permit applications, the Bureau of Land Management has been processing drilling permits on a more rapid basis (from an average time of 127 days for approval in 2006 to 71 days for approval in 2011). But it’s been taking oil-and-gas companies much longer to file them, going from 91 days in 2006 to 236 days in 2011. That could be in part because, with shale available, federal leases are now a lower priority for companies, but the CRS suggests that industry compliance has become more complicated and time-consuming, despite attempted reforms. Thus, despite the BLM’s being quicker, the average total time to get a permit has actually risen (from 218 days in 2006 to 307 days now). The CRS concludes that some reforms in this area will be useful, but that approval “will likely remain more involved and time-consuming than that on private land.”



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