The Associated Petroleum Industry held a conference call with reporters this morning in anticipation of President Obama’s speech on energy. The API’s top policy expert on upstream operations, Erik Milito, discussed the many policy and regulatory decisions by the Obama Administration that have prevented domestic energy development, especially offshore oil and natural gas.
Yesterday, the President’ point person for oil and natural gas development, Secretary Salazar, released a politically motivated and deeply flawed report on so-called idle leases. Among other things, it lists offshore leases that do not yet have approved exploration or development plans as “inactive,” regardless of whether there is exploration or pre-production activity going on such as seismic or technical reviews of the geography. This preparation work is necessary to determine whether natural resources exist on a lease and how to produce any oil and natural gas safely.
The Administration’s report assumes that oil and natural gas are spread uniformly across a lease acreage, suggesting that 70 percent of idled leases equates to 70 percent idled resources – as if finding oil were no more difficult than sticking a pipe in the ground. (continue reading…)