More Access to Keep U.S. Energy Revolution Rolling

Mark Green
Posted December 4, 2014

One key to sustaining and growing the ongoing U.S. energy revolution is to increase access to America’s oil and natural gas reserves – specifically, gaining more access to reserves under federal control, onshore and offshore.

And a revolution is what we’re seeing. According to the U.S. Energy Information Administration (EIA), domestic crude output topped 9 million barrels per day for the fourth week in a row, a production level not seen since the mid-1980s, as energy/economics blogger Mark J. Perry tweeted:

CHART: Energy milestone - Monthly US oil output topped 9M barrels/day in November for the first time since March 1986 pic.twitter.com/Xmuvp2h4T3

— Mark J. Perry (@Mark_J_Perry) December 3, 2014

As great as that news is, it could be better because America’s energy production growth – generating new jobs, growing the economy and increasing our energy security – is occurring on state and private lands. More access to reserves in federal areas would help expand the revolution, generating even more benefits.

Yet, production in federal areas is declining. A congressional study earlier this year found that from 2009 to 2013, oil output was down 6 percent on federal lands, and natural gas output was down 28 percent. On non-federal lands production surged – oil up 61 percent and natural gas up 33 percent.

Here’s another indicator: This week the Interior Department announced disbursements of $13.4 billion in revenue generated by energy production on federal and Indian lands during fiscal year 2014 (through Sept. 30). That’s about $770 million less than was generated in fiscal year 2013.

Charts for the two fiscal years from Interior’s financial data site show that disbursements to the states for onshore activity declined $2.5 million and that disbursements to the federal treasury were off $1.3 billion. These were partially offset by increases to other funds, but the bottom line is a $770 million decline, FY2013 compared to FY2014 – a point conspicuously missing from the Interior press release.

Interior Secretary Sally Jewell:

“Revenue generated from developing public energy resources that belong to all Americans helps fund critical investments in communities across the United States and creates American jobs, fosters land and water conservation efforts, improves critical infrastructure, and supports education.”

We agree – which is why declining energy production in areas under Washington’s control needs to change.

Access has been mentioned. More acreage needs to be open to development, starting with reserves known to exist off America’s coasts on the outer continental shelf (OCS).

Yet, 87 percent of our offshore acreage remains closed to development. The Interior Department is developing the next five-year offshore leasing plan right now, and it needs to include vast acreages like the Atlantic OCS, where this summer the federal government’s revised resource estimate said areas within the 200 nautical mile U.S. Exclusive Economic Zone from Maine to Florida could hold 4.72 billion barrels of technically recoverable oil and 37.51 trillion cubic feet of natural gas – numbers that are 43 percent and 20 percent higher, respectively, than the previous estimate done in 2011. A Quest Offshore Resources study calculates that Atlantic development alone could create nearly 280,000 jobs and grow the economy by up to $23.5 billion a year.

In addition to access, federal permitting should be streamlined to foster greater predictability in the process, which in turn would encourage investment.

Access, sensible regulation and permitting all would help keep America’s energy revolution rolling. They’re integral to an energy strategy that sees harnessing this country’s resource wealth for now and in the future. It’s an approach the current administration talks about but has done little to implement where it has control. API President and CEO Jack Gerard:

“We appreciate the president … acknowledging the economic success that has been driven by America’s oil and natural gas industry. As he noted, oil imports have been cut in half and rising natural gas production is revitalizing manufacturers while reducing carbon emissions to near 20-year lows. But let’s be clear – our energy renaissance has occurred despite White House policies, thanks primarily to the support of private investors and state governors who have worked diligently to support new development.”