Oil Expert: Dem House Leader Misleads CNBC on Oil Lease Drilling

     As gas prices increase, Congress is feeling more and more pressures from its constituencies to explore for oil in areas that are off-limits, including the Outer Continental Shelf and in the Arctic National Wildlife Refuge (ANWR).

     Many politicians in Washington, D.C. oppose those efforts due to environmental concerns, but House Majority Leader Steny Hoyer (D-MD) told CNBC’s “Squawk Box” on June 12 he’s not opposed to drilling, but said oil companies aren’t using the leases they have.

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     “Well, there’s nothing wrong with drilling,” Hoyer said. “But the fact of the matter is we have 80 percent of the leases that are currently authorized that are not being drilled upon - 80 percent on gas, 82 percent on natural gas. We have most of the outer continental shelf as well as the on-land, on-the-mainland leases that are not being used.”

     Hoyer was interviewed by “Squawk Box” co-hosts Carl Quintanilla and Don Carty. Hoyer wasn’t clear on his numbers – whether 4.5 million barrels or 4.5 millions of gallons a day were being left untapped, but he accused the oil companies of not utilizing the leases they have approved.

     “Again, I would repeat – most of the lease-hold places that are now available for drilling are not being used,” Hoyer said. “As a result, if we used the capacity that’s now available, we’d have another 4.5 million barrels a day available to us. I don’t know whether that’s barrels quite frankly or millions of gallons, but the fact of the matter is right now – if the companies would utilize the leases they now have approved, we would have four-and-a-half million more gallons per day in capacity.”

     However, according to the Richard Ranger, a senior policy advisor for the American Petroleum Institute (API), there’s no oil to be drilled for in those areas. Ranger also told the Business & Media Institute he was unfamiliar with Hoyer’s 4.5 million figure.

     “There are more than 8,500 active leases on the Outer Continental Shelf that cover over 44 million acres,” Ranger said. “Now, over 6,300 of those leases on nearly 34 million acres have no production.”

     According to Ranger, the process of pulling crude oil out of the ground is long and complicated and won’t necessarily show immediate results.

     “The process of looking at an area that might have oil and gas potential and narrowing your search over time and over a sequence of steps to actually producing oil and gas involves kind of casting a big net first and over time through geologic work,” Ranger said. “[Y]ou prioritize some over others, you may be lucky on those first ones you drill, you may not – then you drill prospects further down your priority list “

     Ranger also explained it’s not always a cut-and-dried situation. Some areas will have oil and gas, some won’t and some might have it, but it may not be economically feasible to pump it out of the ground.

     “When you drill, you have results that are either sufficient oil or gas to allow production or a dry hole or somewhere in between where you think we may have production but we may need some further work to determine whether this formation, this target is economic to produce. Those steps consume several years from the point of leasing to a point of decision.”

      According to federal government estimates, recoverable oil estimates ranges from 600 million barrels at the low end to 9.2 billion barrels at the high end in ANWR.