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Home Front: Politix
Two-thirds of oil and gas leases in Gulf inactive
2011-03-30
Julie Pace, AP

WASHINGTON – An Interior Department report to be released Tuesday says more than two-thirds of offshore oil and gas leases in the Gulf of Mexico are sitting idle.

According to the report, obtained by The Associated Press, those inactive swaths of the Gulf could potentially hold more than 11 billion barrels of oil and 50 trillion cubic feet of natural gas. The report also shows that 45 percent of all onshore oil and gas leases are inactive.

President Barack Obama ordered the Interior Department review earlier this month amid pressure to curb rising gas prices. The White House says Obama will address his plans for the country's energy security during a speech in Washington Wednesday.
Fair use commentary: this news report is a typical MSM FUD: it incites but doesn't explain.

The question is, WHY are the leases inactive? I could suggest that it's because the Department of the Interior won't release permission to do test drilling in the leased area. Without that permission you can't drill. There may be required permits that haven't been issued. How long have the oil companies been trying to drill in these leases? When were permits requested? Without that information you don't know who to blame.

Er, well, Obama knows who to blame, "greedy big oil", and you'll see it at the presser on Wednesday.

To be clear: if a lease has potential but the oil company is just sitting on it, then there should be a mechanism to fix that. Leases can and should be time-limited: use it or lose it. But to the extent that Interior is holding up the permissions and permitting, which we know (from other news reports) that they're doing, it's the Federal government that is to blame.

Not that Julie Pace at the AP will tell you that.
Posted by:Steve White

#6  I could show 'em a lot of idle leases, idle because @ $100/bbl they're not economically viable but the might be some day. "Could potentially hold" doesn't equate with "recoverable reserves".
Posted by: AzCat   2011-03-30 23:54  

#5  Leases can and should be time-limited

Leases ARE time-limited. 5 years in shallow water until you have to have drilled it and submitted a plan to produce
(assuming you found something.) You pay a competitive bonus up front for the right to look. Then you pay a royalty (1/6 in shallow water) of everything you produce. In deeper water the terms vary due to cost and lead-time.
Posted by: Glenmore   2011-03-30 20:00  

#4  pressure to curb rising gas prices

Rising Gas? Or falling Dollar Purchasing power?

Which is more likely Mr Ben "Helicopter" Bernanke?
Posted by: Bright Pebbles   2011-03-30 19:14  

#3  That would be money circulating here instead of overseas. Funny how broken windows supposedly stimulate the economy but turning metal doesn't.
Posted by: Thing From Snowy Mountain   2011-03-30 15:59  

#2  For perspective [PDF]: the USA in 2010 imported 9.1 million barrels of crude a day on average. 11 billion barrels is about the total of US imports over 3 years.
Not a great deal, but it would have helped.
Posted by: Anguper Hupomosing9418   2011-03-30 14:44  

#1  Not to mention the Dept. of the Interior's repeated violation of a COURT ORDER in imposing a moratorium on gas exploration in the same region after the BP blowout. If you were running an oil exploration company, would you be willing to risk more money in a field where the RULE OF LAW has been suspended? This uncertainty can explain a lot.
Posted by: Anguper Hupomosing9418   2011-03-30 14:40  

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