H.R. 6251 Archives - Shopfloor

Use it or Lose it, Play or Pay, Drill or Get out of Dodge….Fails

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H.R. 6251, the winsomely titled Responsible Federal Oil and Gas Lease Act, fell far short of the two-thirds margin needed to pass under a suspension of the rules, 223-195. Reuters story here.

The White House issued a tough and clearly worded veto threat earlier today. From the Statement of Administration Policy:

Some have argued that leaseholders are “sitting on” leases rather than producing oil from them. This absurd claim ignores the tremendous incentive for a firm to drill when oil prices exceed $130 per barrel. Firms want to drill where they can most profitably extract oil. A firm that is not drilling in a particular area either cannot find recoverable oil there, or thinks it can find oil that can be extracted at lower cost, or has not yet completed the more than a dozen plans and permits needed to allow drilling. Congress should be allowing firms to find oil where it will produce the least expensive gasoline for the American driver.

Use It or Lose It, Make It or Fake It

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A catchy slogan like “use it or lose it” is nice and all, but it represents a purely political, non-substantive approach toward U.S. energy needs. H.R. 6251, which would “prohibit the Secretary of the Interior from issuing new Federal oil and gas leases to holders of existing leases who do not diligently develop the lands subject to such existing leases or relinquish such leases,” is expected on the House floor today, CQ reports.

The knowledgeable dismiss it:

An informal caucus of House Democrats from oil-producing states met this week with petroleum geologists from the Interior Department’s Minerals Management Service. The meeting convinced them that the bill would do little to compel new drilling on existing leases, said the group’s leader, Texas Democrat Gene Green.

“I think there’s a lot of opposition from Energy Democrats to use it or lose it,” Green said. “You can’t produce on every acre or even every 100 acres. I think those numbers come from people who don’t understand this business.” …[snip]

“I understand what they’re doing, but it’s a little simplistic,” said Tyson Slocum, an energy analyst for the advocacy group Public Citizen. “It looks like a middle-ground, slightly muddled message. Some of these leases are not super-productive. People are upset and desperate with high prices. Democrats are scared of the new polling, and instead of saying, ‘It’s not true, we can’t fix the problem by drilling,’ they’re coming up with their own half-baked drilling plan.”

Indeed, the American Association of Petroleum Geologists is also skeptical, taking for the association an unusual step of getting directly involved in a political/legislative fight. From the Oil and Gas Journal:

US consumers are burdened by high crude oil prices. Conservation and efficiency improvements are necessary responses, but equally important is increasing long-term supply from stable parts of the world, such as our very own federal lands and Outer Continental Shelf,” said American Association of Petroleum Geologists head Willard R. (Will) Green.

“As Congress considers measures to deal with high crude oil prices, I urge caution. Policies that increase exploration costs, decrease the available time to properly evaluate leases, and restrict access to federal lands and the Outer Continental Shelf do not provide the American people with short-term relief from high prices and undermine the goal of increasing stable long-term supplies,” he said in a June 23 letter to House Speaker Nancy Pelosi (D-Calif.), Majority Leader Steny H. Hoyer (D-Md.), and Minority Leader John Boehner (R-Ohio).

A good explanation of the realities of leasing and drilling follows.