[9] As a result, the moratorium on new leases will not impact the production of oil and gas in the short term as drilling will likely . , They exist. Were just there as oversight.. DeSantis first took office. "Companies sometimes hold leases as a bit of a mind game with their competitors, or even just because they didnt properly assess the production potential prior to leasing due to lack of data or that sort of thing. the Mineral Leasing Act. EIN: 41-0953924. 1800 I Street NW Generic 1st 'XB' Future. 2023 FOX News Network, LLC. Having thousands of unused drilling permits is not something that is unique to Bidens tenure. You rely on Marketplace to break down the worlds events and tell you how it affects you in a fact-based, approachable way. They could be drilling right now, yesterday, last week, last year. "The record profits oil companies made in 2022 and the thousands of approved but unused drilling permits they are sitting on shows that there is nothing getting in the way of increasing oil production except Big Oil's own decision to funnel their profits into the pockets of shareholders and executives," an official told Fox News. Then, an electrical submersible pump, or ESP, was sucked down into the well. From cancelling the Keystone XL pipeline, to refusing to hold Federal leases sales, to threatening to refuse to . Oil and gas companies can raise funds from investors by not drilling on leases with proven reserves, said Hugh Daigle, an associate professor at the University of Texas Hildebrand Department of Petroleum and Geosystems Engineering. Oil and gas companies are currently sitting on 23 million acres of unused federal leases, an area roughly the size of Indiana. Feb 2021 Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2022 Feb 0 100 200 300 400 500 600 700. "Its simply not true that my administration or policies are holding back domestic energy production," Biden said March 8 in a speech announcing a U.S. ban on Russian oil imports. Labor is in such short supply in the region that stories like this are common, Cohorn said. However, once the permit is approved, drilling doesnt start overnight. "They have 9,000 permits to drill now. Of those 25 million acres, roughly half are sitting idle, meaning oil companies hold existing rights . The Biden administration quietly updated a federal database showing how many unused oil and gas drilling permits it has approved, reducing the number by more than 2,000.. I sent in the FBI and the U.S. After Joe Biden became vice president, at the behest of his father, he gave his uncle, Frank H. Biden, a Purple Heart for serving in the U.S. military during World War II. It sits about an hour outside Midland and its where Henrys crews are fracking for oil. But its not as simple as Biden made it seem, because there are some steps before companies begin production. A federal judge has revoked oil and gas leases sold in the Gulf of Mexico in November, saying the Interior Department did not take into account its impact on climate change. Here's why: President Joe Biden said that his policies have not made the U.S. less equipped to withstand the impact of the ban on Russian energy imports. Eric Gay/AP. Some companies choose not to drill for corporate reasons because they can raise funds from investors by not drilling on leases with proven reserves. What the administration is doing is theyre trying to do what they can, with what little leverage they have, to try to get oil and gasoline prices down.. Join us for a free, virtual event for International Women's Day on March 8! The oil and gas industry has stockpiled millions of acres of leases on public lands and waters. ", "They are under pressure from the financial community to pay more dividends, to do more share buybacks instead of the proverbial 'drill, baby, drill,' which is the way they would have done things 10 years ago. Mutual Fund and ETF data provided by Refinitiv Lipper. You know, if the federal government is complaining about 9,000 leases, not having anything done with them well, thats just a very small fraction of the total amount of leased acreage out there, said Hugh Daigle. "Families cant afford that companies sit on their hands. Theres a lot happening in the world. They could be drilling right now, yesterday, last week, last year.". Biden said that companies pumped more oil in the U.S. during his first year in office than during his predecessors first year and that we were on track for record oil production next year. All material subject to strictly enforced copyright laws. Douglas Holtz-Eakin, an economist and president of the American Action Forum, a center-right think tank, said firms are trying to assess the durability of the global rebound. Sign up for the daily Marketplace newsletter to make sense of the most important business and economic news. "So it simply wasnt profitable to drill with oil below $70. The sand and water necessary for fracking are hard to come by too. Psaki said 90% of leases are on public lands and that there are 9,000 unused drilling permits. Biden claimed 9,000 oil drilling permits are unused. T he Interior Department revised down its estimate of the total number of unused federal drilling permits, which the Biden administration used much of last year as a . Companies have to contract rigs to drill the wells, and build a sufficient inventory of permits before rigs are contracted, said Jennifer Pett, a spokesperson for the Independent Petroleum Association of America, a trade group that represents oil and natural gas producers. The top five holders of unused leases on federal lands include EOG . The U.S. has more than 24 million acres under lease to oil and gas companies onshore close to half are not producing. Biden routinely responded to that charge by accusing oil and gas companies of "sitting on nearly 9,000 unused but approved permits for production on federal lands," a talking point that is now debunked. Revenues are split between the state where the drilling occurs and the U.S. Treasury. At the same time, this is a really profitable business, especially with West Texas Intermediate trading at close to $100 a barrel. 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There is actually an incentive for the companies not to develop these resources because for publicly traded companies, these reserves get reported and influence market valuation, Daigle said. That's enough to last the industry another 10 years, by one estimate . But its not as simple as Biden made it seem, because there are some steps before companies begin production. Companies dont have to immediately begin drilling as their leases last 10 years and can be extended beyond that. For nearly a year, the Biden administration has attempted to redirect scrutiny over its slow walking of federal oil and gas leases by chastising U.S . If . But a Biden administration official downplayed the alteration Monday, saying the number of unused oil and gas permits remains high. Its almost like Johnny Cashs Cadillac we get it one piece at a time.. 33701 Ultimately, energy policies affect the energy investment climate. For perspective, Doug Ackerman, President of the New Mexico Oil and Gas Association, said it takes upwards of 12 months to get the 30-50 permits required to drill a single well during a House Natural Resources subcommittee hearing earlier this month. Florida Senate Bill 2A does not provide "immediate relief" to homeowners dealing with high property insurance rates and "will force some constituents to pay up to 20% more. We rely on your financial support to keep making that possible. Market data provided by Factset. Companies dont have to immediately begin drilling as their leases last 10 years and can be extended beyond that. The department, which manages oil and gas drilling on federal land, blamed the change on a "reporting discrepancy.". Are gas prices going up? While crude oil production fell slightly in December 2021 compared to November 2021, the EIA has predicted U.S. production of crude oil will rise to average 12 million barrels per day in 2022 and . Biden said the oil industry has 9,000 permits to drill now. The time for helping Ukraine with American energy was months ago. Wednesday's Energy Absurdity of the Day: Is it '9,000 Unused Leases' or '9,000 Unused Permits?' The White House Doesn't Seem to Know. This is the path to sound energy policy that keeps America safe and strong and allows American energy to support allies. Companies have to contract rigs to drill the wells, and build a sufficient inventory of permits before rigs are contracted, said Jennifer Pett, a spokesperson for the Independent Petroleum Association of America, a trade group that represents oil and natural gas producers. Like when the president points out that some of his competitors are sitting on 9,000 federal land leases they havent drilled. All Rights Reserved. At the end of 2021, there were 9,173 approved and available permits to drill on federal and Indian lands. Please read our Terms & Conditions, Cookies Policy and Privacy Policy before using the site. We need your help. March 2, 2021, PolitiFact, No, the U.S. did not end its domestic oil production. Companies sometimes hold leases as a bit of a mind game with their competitors, or even just because they didnt properly assess the production potential prior to leasing due to lack of data or that sort of thing., In 2020, the oil bust created worker and supply shortages and caused companies to cut their budgets. Biden has a point that the U.S. produced more during his first year than Trumps first year. What Does EPA Say About Water Contamination? "They have to be sure that the costly investment (and time) that it takes to turn a lease into a producing well is worth it.". Patrick Cohorn, operations manager at a family-owned energy company called Henry Resources, headquartered in Midland, Texas, drove me out to a stretch of land just north of the town of Rankin. . Mutual Fund and ETF data provided by Refinitiv Lipper. February 27, 2023 05:28 PM. Corporate strategy has fundamentally changed.. 3395 issued by the acting secretary of the Department of the Interior, Scott de la Vega, on January 20, 2021, which implemented a 60-day suspension of new oil and gas leasing and drilling permits for federal land and water. "While the cost to extract one barrel in Saudi Arabia is somewhere around $10 or $15, in West Texas it can be as high as $70," Gernot Wagner, an associate professor of environmental studies at New York University, told PolitiFact. 12 fast-writing strategies that will give you energy, focus and momentum. Still, the Biden administration maintained its anti-oil rhetoric. ", In 2020, the oil bust created worker and supply shortages and caused companies to cut their budgets. Copyright 2021 - API. Biden said the oil industry has "9,000 permits to drill now. The president suggested the onus is on the industry to start drilling. We should be honest about the facts.". It is time for the administration to end the finger-pointing and instead support American production with a comprehensive strategy for American energy development one that includes a final five-year program for offshore leasing and quarterly onshore lease sales.. Oil production on federal lands fell to 12.28 . Companies reporting gross acreage while ignoring the quality of that land and production potential is one of the less talked about issues. or redistributed. Gas Prices St. Petersburg, FL All last summer, the administration called on OPEC+, the oil cartel, to increase its production more rapidly in the face of rising energy costs, bypassing American producers. PolitiFact: Biden right oil industry has over 9,000 permits to drill. This is false. U.S. Energy Information Administration, U.S field production of Crude Oil, Center for Biological Diversity, New Data: Bidens First Year Drilling Permitting Stomps Trumps By 34%, Jan. 21, 2022, Western Energy Alliance, Responding to the White House Blame Game on Leases, March 4, 2022, Washington Post, Biden outpaces Trump in issuing drilling permits on public lands, Jan. 27, 2022, CNN, More oil supply could stop massive price spikes. Those permits include those issued under . The president suggested the onus is on the industry to start drilling. And is it Joe Bidens fault? Then, Biden administration support for robust U.S. production might have helped deter Moscow from thinking that European nations dependent on Russian energy might do less to oppose Russia the aggressor. Department of the Interior According to DOI, 53 percent of leased onshore oil and gas acreage is non-producing while 77 percent of leased offshore acreage is non-producing. Everything in yellow is acreage that we own and operate, he told me. Marketplace is a division of MPR's 501 (c)(3). But it does import some of its oil from Russia, Feb. 28, 2022, PolitiFact, The U.S. did not double oil imports from Russia in the last year, Feb. 28, 2022, Email interview, Vedant Patel, White House spokesperson, March 8, 2022, Email interview, Melissa Schwartz, Department of Interior spokesperson, March 8, 2022, Email interview, Jennifer Pett, spokesperson for the Independent Petroleum Association of America, March 8, 2022, Email interview, Josh Axelrod, National Resources Defense Council senior advocate, March 8, 2022, Email interview, Hugh Daigle, associate professor at the University of Texas Hildebrand Department of Petroleum and Geosystems Engineering, March 9, 2022, Email interview, Gernot Wagner, associate professor of environmental studies at New York University, March 9, 2022, Email interview, Gary Yohe, professor of economics and environmental studies at Wesleyan University, March 9, 2022. Their University Retaliated Against Them. Some companies choose not to drill for corporate reasons because they can raise funds from investors by not drilling on leases with proven reserves. Even then, he said, getting oil out of the ground takes time. Oil production on federal lands fell to 12.28 million barrels per day in November, the latest month with data. 13 rejected oil and gas leases. This material may not be published, broadcast, rewritten, or redistributed. The minimum royalty rate is significantly lower than those used in most states and on private land and the BLM is providing an improved return to the taxpayer by using a royalty rate of 18.75% for the leases sold in the current competitive lease sales. 236.31. If you came to me and said, Mike, heres $100 million. Thousands of unused permits are not uncommon in any presidential administration. We bring in a vendor, its their drilling rig, their frack crew, they outfit with their own workforce to make the work happen. The Biden campaign's crusade against fossil fuelswhich helped the Democrat appeal to young liberal votershas made many U.S. oil companies wary of investing in new drilling operations given the long-term political risk, the Washington Post reported last year. We should be honest about the facts.". ", Biden said that the companies are not using these permits to drill. But one year after announcing a halt to any new federal oil and gas leasing, Biden has outpaced Donald Trump in issuing drilling permits on public lands.After setting a record for the largest . Posted on 3/6/22 at 5:22 pm to Negatiger1986. However, the unused drilling leases represent a fraction of the active permits, many of which are being used by the private sector to produce oil and gas daily, industry groups said. forward with a plan to lock up even more of our state's land in unused oil and gas leases. Joe Biden: The oil industry has "9,000 permits to drill now. 996 canceled oil and gas leases. (AP). (iStock). 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