Lack of New Drilling Blamed on Oil Companies
With gas prices topping $4 a gallon and the idea of tapping into oil under the Arctic National Wildlife Refuge or the Outer Continental Shelf becoming more popular, liberal members of Congress are changing the basis for their opposition to drilling.
Opposition to opening up new drilling has traditionally focused on environmental concerns, but the chairman of the Democratic Congressional Campaign Committee on June 15 accused oil companies of not using what they already have.
When CNN host Wolf Blitzer asked "why not start drilling" in more U.S. areas "that could dramatically increase supply and as a result reduce the price per barrel or the price at the pump?" Blitzer noted that House Speaker Nancy Pelosi (D-Calif.) "votes against every one of these drilling propositions."
“Well, we are drilling. And there is nothing wrong with drilling. We have lots of oil companies in the United States that are drilling,” Rep. Chris Van Hollen, D-Md., said on CNN’s “Late Edition with Wolf Blitzer. “[A]nd in fact there are 60 million acres of federal lands that are currently leased to the oil and gas companies that are sitting idle. They’re not drilling. They like the status quo. They like the way things are going.”
But the problem isn’t that oil companies “like the status quo.” It’s that lands where drilling is currently allowed don’t offer enough oil or gas to make extraction efficient, according to Red Cavaney, president of the industry-representing American Petroleum Institute (API).
“Well, we are developing,” Cavaney said on “Fox News Sunday” June 15. “And there’s a big misunderstanding. If they understood the industry, they would appreciate the fact that we bid for those leases competitively in the open market. We pay the government to get them.”
According to Cavaney, oil companies can’t just sit on them to maintain the status quo as Van Hollen claimed – they do eventually go back to the government if they aren’t used. The problem is there is no oil or gas on the land to be recovered.
“We have to pay annual lease fees on those particular leases,” Cavaney explained. “And at the end of the lease term – five years, six years, whatever it may be – if we haven’t done anything on those leases, they go back to the government to be bid again. What’s going on is they – the first step in our industry is called exploration. In other words, the Creator didn’t put oil and gas on every plot of land, so we have to go and explore.”
“There’s in very few cases where there is oil and gas in amounts that are commercially usable and those are the ones that you can develop,” Cavaney said. “The rest of them, why drill where you know there’s no oil or gas and let those things go back to the government?”
However, rather than putting oil-rich lands in the Artic National Wildlife Refuge (ANWR) or on the Outer Continental Shelf (OCS) up for lease, Van Hollen proposed on “Late Edition” to take other leases from the oil companies, a measure which wouldn’t produce more oil.
“We’re going to have legislation that we’re going to consider shortly that is ‘use it or lose it,’” Van Hollen added. “If you are going to hold up these 68 million of federal lands, you’ve got to start drilling for oil or else somebody else should have an opportunity to do it. Because the fact of the matter is they’ve been idle for all these many years. So the point is there’s lots of acreage out there already under lease.”
House Majority Leader Steny Hoyer (D-MD) made the same argument against drilling in ANWR or on the OCS on CNBC’s June 12 “Squawk Box,” claiming oil companies weren’t producing oil on leased land, where the industry explained oil can’t be recovered in an economically feasible manner.
According to federal government estimates, ANWR is estimated to contain between 600 million and 9.2 billion barrels of oil.
