Obama to oil firms: Fast track drilling operations

The U.S. government has issued a new report which reveals that about 46M acres of government properties leased out for oil drilling remain unused. The report came out following complaints from the U.S. oil and gas sector that bureaucracy is affecting oil investment, mostly in drilling operations.

Active drilling on government sites comprises one third of offshore leases while, for onshore, on-going drillings make up 50 percent. The US Government declared that it has given around 7,000 permits to operate, but some recipients have yet to start explorations on government and Indian property. These stats are based on a U.S. Department of the Interior report.

Still, heads of the energy sector are saying that Obama and his officials have somehow delayed their plans to invest in oil and gas assets within the short term. One area of complaint is the department’s move to put-off a major assets auction within the Pacific and Atlantic waters until 2017.

They also dispute that the report does not cover vital lead times, such as those occurring between purchasing leases to obtaining government approval (to operate), and completing geological studies until start of exploration.

Amid preparations for the U.S. Presidential elections, the government continues to campaign for “all of the above” oil and gas program, highlighting efforts to boost national production of natural gas and further investing in oil exploration.

Ken Salazar, Dept. of Interior Secretary said “We want companies to develop the tens of millions of acres they’ve already leased but have left sitting idle”. Jack Gerard, President of American Petroleum Institute commented that the report is merely for electioneering purposes and said in defense that they are actually fast tracking operations.

He said further that the sector has already invested up to $200B in 2011 and that they are just waiting for the permits to get the ball rolling. Democrats, on the other hand, proposed an imposition of fees for those companies who continue to maintain idle leases. This is outside of the rental fees already being imposed.

The U.S. government has already put up measures just to induce development in the area.  They have increased rental fees on leased offshore areas where production hasn’t started off.

Government has also cut down rental periods for start-up drillings in shallow waters. Minimum bids were adjusted from $37.50 to $100 per acre (applicable to selected offshore areas only).

Of late, the U.S. Bureau of Land Management has surveyed energy firms regarding the Alaska National Petroleum Reserve, particularly on areas which could be opened for auction.

The Bureau intends to open the region for lease auction in November and reports confirm that there are about 630 areas (approximately 7M acres) shall be made available for lease sale.