Senate Dems Prod Administration on Production

July 16, 2008
11:21 AM
WASHINGTON – U.S. Senator Jeff Bingaman today pressed Interior Secretary Dirk Kempthorne to take immediate action to encourage development on millions of acres that have been leased for oil and gas production. 
            In his letter to Kempthorne, signed by 30 other Democratic Senators, Bingaman pointed out that more than 60 million Federal acres have been leased but are not producing oil and gas.  The Senators urged Kempthorne to immediately take the following steps:
  • Clarify that oil and gas companies holding federal leases are required to diligently develop those leases;
  • Exercise the full extent of the Secretary’s authority for appropriate lease term lengths on the Outer Continental Shelf and rental rates to ensure diligent development;
  • Require oil and gas companies to provide regular reports on their progress in diligently developing their leases.
We write to voice concern over a significant problem in the management of federal oil and gas leases.  Federal lands both onshore and on the Outer Continental Shelf that are already leased – but not producing – are our biggest opportunity to provide needed domestic oil and gas supply in the near-term.  However, we are concerned that policies of the Department do not result in the timely production of these resources,” the letter states.
It appears that the policy emphasis of this Administration has been on having more lease sales, but we believe that not enough emphasis has been placed on encouraging the diligent development of federal lands once leased.  While it is generally true that leases must be produced within certain time frames, we are concerned that federal agencies are not exercising their substantial discretion in managing these leases to require production in the timeliest fashion,” they wrote.
In the letter, Bingaman said another problem with emphasizing new lease sales as a means of increasing production is that oil companies do not always bid on leases.  Of 500 million acres recently put out for bid in the Gulf of Mexico, companies bid on only 200 million acres. 
“If we want to get serious about increasing oil and gas production, a logical place to start is with the Federal acres that have already been leased but are not yet producing,” Bingaman said.
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