Energy Tomorrow RSS Feeds: Energy Security

Take Action on Access - 11/2/2009 11:28:50 AM

Mon, 02 Nov 2009 11:28:50 -0600

Increasing access to oil and natural gas resources could generate nearly 160,000 new, well-paying jobs, $1.7 trillion in revenues to federal, state and local governments and greater energy security. And according to a PricewaterhouseCoopers (PwC) study, the U.S. oil and natural gas industry already supports 9.2 million American jobs and contributes more than $1 trillion to the national economy, or 7.5 percent GDP.

But it’s not just domestic oil and gas that will provide the jobs and energy our nation needs. Canada, our friendly neighbor to the north and top supplier of oil, will continue to play a vital role as we seek greater energy and economic security.

According to a recent CERI study, the economic impact oil Canadian oil sands development is expected to lead to 342,000 U.S. jobs between 2011 and 2015, and an estimated $34 billion to the U.S. Gross Domestic Product (GDP)in 2015 and $42.2 billion in 2025.

Take action and let your voice be heard. Tell the administration and Congress to act now and put energy to work for Americans.

Send a letter to show your legislators you're concerned about the issues that impact America's energy future. You can also sign-up for the Partnership for America’s Energy Security by clicking on "Get Involved."

Contact the Administration and Congress

It is critical that the administration and members of Congress hear from you in support of expanding access to oil and natural gas resources—including energy supplies from Canadian oil sands.

America needs a comprehensive energy policy that includes energy from all sources. It’s clear that oil and natural gas are the lifeblood of the nation’s economy and are vital to our energy security---and this will be the case for decades to come.

Use the interactive tools below to send an e-mail to the administration and Congress and encourage them to move forward with oil and natural gas exploration and development.

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Tweet your support! (E.g. - Increased access to oil/natural gas = more revenue, jobs & improved #energy security)
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How much oil and natural gas is actually out there? How much of it is off limits?

According to federal government data, the U.S. has enough oil and natural gas to fuel more than 65 million cars for 60 years and enough natural gas to heat 60 million homes for 160 years. In fact, the U.S. government estimates that there are 30 billion barrels of undiscovered technically recoverable oil on federal lands currently closed to development.

And our nation’s number one supplier—Canada—has abundant oil reserves, second only to Saudi Arabia using current technological assessments. According to the Canadian Association of Petroleum Producers, oil sands now account for more than half of western Canada’s total oil production. By 2025, production from Canadian oil sands is expected to rise from about 1.3 million barrels per day to about 3.3 million barrels per day.

To learn more:

Read this page filled with key facts about domestic access.
Watch this video to see what Americans nationwide think about increased access to oil and natural gas resources.
Pour through this comprehensive primer on access and this primer on Canadian oil sands.
Take a closer look at this study about untapped U.S. oil and natural gas resources.
Try out the interactive Access Counter to see what America is using – or not using – when it comes to oil and natural gas.

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Canadian Oil Sands - 10/29/2009 4:28:19 PM

Thu, 29 Oct 2009 16:28:19 -0500

Our nation needs more supplies of all energy sources, including oil and natural gas, to meet growing energy demand and provide consumers with reliable supplies of fuel. What many Americans don’t know is that the U.S. gets more oil from Canada than from any other country.

Canadian oil is a reliable and plentiful strategic resource for meeting our nation’s growing energy demand and making the United States more energy secure.

Here are some of the most asked questions and answers about Canadian oil sands:

How abundant are Canada’s oil reserves, and what portion do oil sands constitute? Canadian oil reserves are vast and are second only to Saudi Arabia, using current technological assessments. According to the Canadian Association of Petroleum Producers, oil sands now account for more than half of western Canada’s total oil production. By 2025, production from Canadian oil sands is expected to rise from about 1.3 million barrels per day to about 3.3 million barrels per day.

Why is Canadian oil important to the United States? Canada and the United States have an excellent trading and political relationship, and Canada’s reliable and plentiful oil is crucial to improving our nation’s energy security and meeting its growing energy demand.

The economic impact of Canadian oil sands development is a boon for the U.S. economy and is expected to lead to the creation of more than 340,000 new U.S. jobs between 2011 and 2025.

How much of its oil does Canada export to the United States? Currently, Canada sends more than 99 percent of its oil exports to the United States—the bulk of which goes to Midwestern refineries. By getting more of their oil from Canada, Midwest refineries would move from the back of the crude oil supply line to the front—making them less vulnerable to supply disruptions caused by geopolitical upheaval or storms in the Gulf of Mexico.

What are oil sands and how are they used? Oil sands are naturally occurring mixtures of sand, clay, water and a form of petroleum called bitumen—which can be upgraded for synthetic crude oil and refined to make asphalt, gasoline, jet fuel and some chemicals.

How do oil sands factor into the U.S. energy mix? According to EIA, Canada is the number-one supplier of imported oil and natural gas to the United States. Of the Canadian crude oil brought into this country, approximately half is derived from oil sands. According to a study released in May 2009 by the Cambridge Energy Research Associates, if oil sands development is maximized, the amount of oil the Unites States imports from Canada could potentially double by 2035.

Are there economic benefits associated with producing crude derived from Canadian oil sands? A study commissioned by API and conducted by the Canadian Energy Research Institute, "Canada's Oil Sands and Economic Impact on the United States' Economy," says greater production of Canada's oil sands is expected to stimulate economic activity in both countries, creating more than 340,000 new jobs in the U.S. alone.

As oil sands production and investment rises, the demand for U.S. goods and services also increases, adding an estimated $34 billion to the U.S. Gross Domestic Product (GDP) in 2015 and $42.2 billion in 2025.

The benefits of oil sands development do not fall to only one industry or any one region in the U.S. but are broadly shared across many industrial sectors and regions. Huge sums are being invested to build new pipelines and expand refineries to transport and process Canadian oil.

Are there environmental concerns regarding the use of crude derived from oil sands? The extraction and processing of oil sands do, on average, result in higher greenhouse gas (GHG) emissions than light, sweet (low-sulfur) crude oil. But so do many of the heavy, high-sulfur crudes that are being produced in the United States and around the world. On a life cycle (or well-to-wheels) GHG emission basis, oil derived from Canadian oil sands is comparable with other crudes refined in the United States. We believe that the United States is equipped to manage the emissions from crude derived from oil sands with greater care than if it were processed in regions of the world with less stringent environmental standards— not to mention the environmental costs of transporting the crude elsewhere.

What steps are being taken to limit the environmental impact of the practice? The oil and natural gas industry remains committed providing the energy our nation needs to power its economy in a reliable and environmentally-responsible manner. To this end, the oil and gas industry has invested $58 billion, which is 44% of all low and zero carbon technology investments, in the US between 2000 and 2008. This is more than what the federal government or all other industries combined are investing.

Does the use of oil sands affect the quality of the refined product? Using oil sands as a feedstock does not affect the quality of the refined products. In fact, gasoline and other fuels made from oil sands already are being used in the United States. Every project is required to adhere to applicable federal, state and local regulations and permitting conditions. And the vast investments refiners and pipeline operators are making to increase capacity and flexibility to process oil sands includes the equipment necessary to make products that meet all required specifications.

Read the study, "Canada's Oil Sands and Economic Impact on the United States' Economy," and this Canadian oil sands primer for more information.

Hydraulic Fracturing - 10/28/2009 4:01:55 PM

Wed, 28 Oct 2009 16:01:55 -0500

Hydraulic fracturing is a critical, tested oilfield technology that’s been used to help produce more than seven billion barrels of oil and 600 trillion cubic feet of natural gas. It is well-regulated, safe and important to future energy production.

Here are questions and answers that explain more:

What is hydraulic fracturing? Hydraulic fracturing is a nearly 60-year-old proven technology used to produce oil and natural gas. It involves pumping a water-sand mixture into rock formations where the oil or gas is trapped. The pressure of the water creates tiny fissures in the rock. The sand holds open the fissures, allowing the oil or gas to escape and flow up the well.

Is hydraulic fracturing widely used? Yes, and its usage is likely to increase. A government-industry study found that 60 percent to 80 percent of natural gas wells drilled in the next decade will require hydraulic fracturing.

Why is hydraulic fracturing important? It enables production of more oil and natural gas, reducing dependence on foreign sources of energy and creating more jobs for Americans. It’s an indispensable technology for producing much of our natural gas, which heats millions of homes and generates a substantial amount of the nation’s electricity. Natural gas also powers many buses, cars and trucks and provides feed stocks for manufacturing fertilizer and a wide range of other industrial and consumer products. When burned for energy, natural gas emits substantially less air pollution and greenhouse gases than other fossil fuels.

Doesn’t hydraulic fracturing present a serious threat to the environment? No. The environmental track record is good, and the technology is employed under close regulatory supervision. Hydraulic fracturing has been used in nearly one million wells in the United States with minimal environmental impact, as studies by the U.S. EPA and the Ground Water Protection Council have confirmed.

How are the fluids kept away from aquifers and drinking water wells? Wells are drilled away from drinking water wells. Also, fracturing usually occurs at depths well below where usable groundwater is likely to be found. Finally, when a well is drilled, steel casing and surrounding layers of concrete are installed to provide a safe barrier to protect usable water.

Who regulates hydraulic fracturing? There are multiple federal, state and local government rules addressing environmental protection during oil and gas operations, including the protection of water resources. These rules cover well permitting, well materials and construction, safe disposition of used hydraulic fracturing fluids, water testing, and chemical recordkeeping and reporting.

Isn’t there a risk that hydraulic fracturing will use up an area’s water supplies? No. Local authorities control water use and can restrict it if necessary. In many areas, water is recycled and reused; in some cases, companies pay for the water they use, which comes from a variety of sources.

Why should people allow hydraulic fracturing? Besides the energy produced with little impact on the environment, communities benefit economically. Energy development creates jobs and generates millions of dollars in royalties, taxes and other revenues to federal, state, and local governments.

Watch this video for more on hydraulic fracturing.

Facts About OCS Five Year Plan - 9/22/2009 9:39:45 AM

Tue, 22 Sep 2009 09:39:45 -0500

September 21 marked the closing of the MMS public comment period on the Draft Proposed Program on Outer Continental Shelf (OCS) energy development.

Our nation has vast offshore oil and natural gas resources that could be produced safely to put this country's economy back on its feet. Increased access to these resources can generate revenues for government at all levels, create jobs and provide greater energy security for our nation.

Let MMS and your members of Congress know that you, along with most Americans, support putting domestic oil and natural gas resources to work for Americans. Visit the Action Center to find out how you can get involved.

In addition, here are some facts about expanded offshore development and the stalled Outer Continental Shelf (OCS) Five-Year Plan

U.S. Interior Secretary Ken Salazar on February 10, 2009 extended by 180 days the comment period on the latest Five-Year Plan on offshore oil and natural gas development. The decision delays the development of America’s vast offshore resources and could deprive Americans of new jobs, greater energy security and the revenues that would come into federal, state and local coffers from offshore development.

CLAIM: America’s oil and natural gas industry favors a drill-only energy strategy.

FACT: That is not true. America’s oil and natural gas industry favors a balanced energy policy incorporating all forms of energy, including oil and natural gas. Even with accelerated development of alternatives, the world is going to need more oil and natural gas to help meet expected increases in demand. Most alternatives are used only in electricity generation, not the transportation sector. Oil and natural gas are our bridge to any energy future, given that they account for more than 60 percent of our current energy consumption and parallel amounts of infrastructure or capital investments. The U.S. oil and natural gas industry has invested more than all private industry and the federal government combined in new energy technologies to meet our future energy needs from 2000 and 2007.
CLAIM: Americans do not want offshore development of oil and natural gas resources. And they were not given an opportunity to comment on whether to develop our offshore resources.

FACT: The U.S. government initiated a new Five-Year Plan two years earlier than usual in response to changed market conditions and Americans’ demands that it do something to respond to high prices and the country’s energy challenges. By stalling the interim Five-Year Plan, Secretary Salazar ignores that more than 152,000 Americans have already commented on it. Some 87,000 of those who commented urged expeditious and expanded development of our offshore oil and natural gas resources in areas where there had been an almost 30-year ban. In November Election Day exit polls, two-thirds of Americans polled said they supported greater development of our offshore resources.
CLAIM: The federal government has not done anything to develop offshore renewable energy resources.

FACT: Legislation passed in 2005 gave the Minerals Management Service authority to develop regulations for alternative energy. MMS has been developing rules for alternative energy resources for several years, through a process involving intensive public comment. That final rulemaking is necessary and is expected to be released soon. This alternative energy plan should not delay oil and natural gas development.
CLAIM: Offshore development is not that important, and it is not going to get us where we need to go.

FACT: The OCS currently provides 23 percent of America’s natural gas resources and 30 percent of our oil resources. Most of these resources are from either Alaska or the Gulf of Mexico. Opening areas that had been off-limits to development could lift domestic crude oil production by nearly a million barrels per day in 2030. If we added now off-limits onshore areas to those offshore areas, we could boost output by as much as 2 million barrels per day in 2030, offsetting nearly a fifth of the nation’s imports. Secretary Salazar’s decision to extend the comment period on the Five-Year Plan simply means that the development of our offshore resources could be stalled. That would delay Americans’ access to new jobs and to greater energy security, and would keep much-needed revenues from federal, state and local governments. A recent ICF International study, commissioned by API, found that developing off-limits onshore and offshore federal oil and natural gas could create 160,000 new jobs and generate $1.7 trillion in government revenue.
CLAIM: The MMS Five-Year Plan process is not sufficient and we need to study the impact of the OCS oil and natural gas development more.

FACT: The Five-Year Planning Process is a very detailed regulatory process put in place decades ago. There is a specific timeframe by which the MMS has to conduct the three public comment periods, conduct the environmental analysis, and then issue their final schedule of lease sales. This process usually takes two years before a lease sale is scheduled. No leasing and development can take place without a final Five-Year Plan. By delaying the Five-Year Plan process, the Secretary has essentially put an uncertain timeframe as to when we will see an actual scheduled lease sale, thus putting development and production of our resources on hold.
CLAIM: We do not have enough information on OCS resources, and need to study it more.

FACT: Secretary Salazar says that the study he has asked the MMS and U.S. Geological Survey to conduct will create a plan and determine what areas need more information. The geologic and geophysical data is over 20 years old in areas such as the Atlantic. If the government were to undertake seismic survey work, it would cost taxpayers millions, and it is uncertain what geological experts would be available to interpret the data. Once a lease sale is held, companies would undertake the seismic work at their own cost.
CLAIM: Alternative energy must be developed instead of oil and natural gas, and the two cannot co-exist on the OCS.

FACT: Development of alternatives as well as oil and natural gas can co-exist and the alternative industry can learn lessons about operating in the marine environment from the oil and natural gas industry. In fact, the revenues generated by offshore leasing and production could help fund the acceleration of alternative energy development in this country. The oil and natural gas industry has been working in the U.S. offshore since the 1950s and through this extensive operating experience, the industry has developed processes and procedures on how to work in the challenging conditions of a sometimes challenging marine environment. The industry has developed numerous operating standards to safeguard the environment and employees which it can share with others working offshore, including alternative energy suppliers.

Shale Gas - 6/9/2009 9:14:11 AM

Tue, 09 Jun 2009 09:14:11 -0500

With the tremendous success of the Barnett, Fayetteville and Woodford shales in the United States, the gas shale resource base will play a major role in the future natural gas production on which the nation will depend. Already the Barnett Shale in Texas produces 6 percent of all natural gas produced in the Lower 48 states. Recent announcements of emerging plays in Appalachia, Northern Louisiana, British Columbia, and South Texas indicate the widespread potential of shale gas resources across North America.

Shale gas is defined as natural gas from shale formations, with the shale acting as both the source and the reservoir for the natural gas. Each of these shale gas basins is different and each has a unique set of exploration criteria and operational challenges.

In general, shale gas deposits are often lower in resource concentration, more dispersed over large areas, and require well stimulation or some other extraction or conversion technology, like hydraulic fracturing, to produce. The rapid rise in production from shale formations is due in large part to hydraulic fracturing and other significant advances in horizontal drilling and well stimulation technologies.

More information about shale gas and U.S. energy security:

How important is shale gas to the U.S. energy mix? According to forecasts by consulting firm ICF, tight gas, coalbed methane and shale gas will make a major contribution to future North American gas production—with unconventional gas production expected to increase from 42 percent of total US gas production in 2007 to 64 percent in 2020.

How much shale gas is available in the United States? In November 2008, the Interstate Natural Gas Association of America (INGAA) published “Availability, Economics and Production Potential of North American Unconventional Natural Gas Supplies,” a report that estimates natural gas resources in North America exceeding 2,300 trillion cubic feet (Tcf)—with shale gas resources alone accounting for over 500 Tcf of recoverable natural gas in the United States and Canada. For the lower 48 states, shale gas is estimated at 385 Tcf. However, the report states that the industry must have land access for drilling, a reasonable permitting process and adequate prices and demand for natural gas to achieve the forecasted results.

How long are shale gas resources expected to last? The U.S. Department of Energy’s April 2009 report, “Modern Shale Gas Development in the United States: A Primer,” stated that at 2007 U.S. natural gas production rates of about 19.3 Tcf, the current recoverable resource estimate provides enough natural gas to supply the US for the next 90 years. Separate estimates of the shale gas resource extend this supply to 116 years. Production of shale gas is expected to increase from a 2007 US total of 1.4 Tcf to 4.8 Tcf in 2020. The DOE report states that shale gas production potential of 3 to 4 Tcf per year may be sustainable for decades.

How accurate are assessments of shale gas potential? The INGAA study states that the assessment of shale gas potential in the United States and Canada is a work in progress and there is a long way to go to understand remaining potential and implications for future natural gas production. The advance of drilling and well completion technologies, including hydraulic fracturing, has opened up plays in a number of different basins that were not previously considered to have economic potential. The volumes calculated for gas-in-place are extremely large, and a small difference in the estimated percentage of gas-in-place that is recoverable has a huge impact on estimates of recoverable resources.

Access to Domestic Supply - 6/5/2009 1:11:09 PM

Fri, 05 Jun 2009 13:11:09 -0500

Increasing access to domestic resources means more jobs, more revenues to help cash-strapped local, state and federal governments, and greater energy security for our nation. With our ailing economy, America must take action now—and that begins with increasing the development of domestic oil and natural gas.

A recent ICF International study shows that more access to domestic energy resources could generate between $1.3 trillion and $1.7 trillion in government revenue, create thousands of new jobs and enhance America’s energy security by significantly boosting energy production.

Take your pick of national polls, and chances are you will find numbers that show Americans calling for more energy exploration, onshore and offshore, here at home. A recent poll shows that more than 60 percent of Americans support new offshore development.

However, a pattern seems to be emerging when it comes to developing domestic oil and natural gas and it can be summed up in one word: delay. Another day without increased access is another day without the jobs, revenue and energy we need.

It is clear that Americans want policies that will allow U.S. companies to develop oil and natural gas resources here in the United States. Lawmakers should know this can all be achieved in harmony with the environment. Since 1980, less than 0.001 percent of oil has been spilled from daily production, far less than the amount released into the ocean from natural seepage. Through the industry’s advanced technology, offshore drilling is able to coexist in the ocean.

The administration and Congress should listen to the American people, and create the energy policy this nation needs.

Facts About Access - 6/5/2009 1:09:31 PM

Fri, 05 Jun 2009 13:09:31 -0500

Increasing access to domestic resources will mean more jobs, more revenues to help cash-strapped local, state and federal governments and greater energy security. With our economy in trouble, we need to take action now.

A recent ICF study found that developing areas of the Outer Continental Shelf currently unavailable for leasing could generate $1.3 trillion for federal, state and local governments to pay for essential services. Add onshore areas now unavailable for leasing, and revenue projections jump to $1.7 trillion.

The same study found 160,000 jobs would be generated in 2030 if new offshore and onshore areas were open for development. Many would be exploration and production jobs, which pay more than double the national average.

The study also found opening new OCS areas could lift domestic crude production by nearly 1 million barrels per day and natural gas production by 3 billion cubic feet per day. If new onshore areas also were opened, output could rise by as much as 2 million barrels a day in 2030, offsetting in total nearly a fifth of our nation’s oil imports.

A pattern seems to be emerging when it comes to developing America’s domestic oil and natural gas resources. It can be summed up in one word: Delay.

Recent examples of delay include the Interior Department extending the comment period for the five-year offshore oil and natural gas lease plan and pushing back the second round of oil shale research and development leases, as well as Virginia’s governor seeking to delay the proposed lease sale off that state, scheduled for 2011.

Every day we delay is another day that we are depriving Americans of the jobs that can be generated through development. It is another day that federal, state and local governments go without the enormous revenues oil and natural gas exploration generates. And it is another day that we outsource our energy security.

Americans support developing domestic oil and gas resources to benefit Americans.

A recent poll shows that more than 60 percent of Americans support new offshore development.

The industry has an outstanding offshore environmental record, and offshore drilling can coexist with clean oceans and clean coasts.

The U.S. OCS produces over 1 million barrels of oil per day. Since 1980, less than 0.001 percent of that has been spilled – far less than the oil released into the ocean from natural seeps.

Energy Throughout the World - 6/2/2009 1:59:16 PM

Tue, 02 Jun 2009 13:59:16 -0500

Oil and natural gas are found all over the world in varying concentrations. The United States imports 60 percent of its oil, with the majority coming from Canada and Mexico, while 84 percent of our natural gas is domestically produced.

Throughout history, about one trillion barrels of oil have been produced. By today's estimates, there are about two trillion barrels of recoverable conventional oil resources worldwide, and as much as twice that in additional frontier resources like extra-heavy oil, oil sands, and oil shale and shale gas.

Advanced drilling and well completion technologies, including hydraulic fracturing, have allowed for the development of these resources in areas that were not previously considered to be economically recoverable.

Currently, there is enough oil and natural gas to supply the world's energy needs for generations to come. And more is being discovered every day.

More information about Canadian oil and U.S. energy security:

The U.S. Energy Information Administration estimates U.S. primary energy demand in 2030 will be 19 percent higher than 2006 levels.
The United States will need more oil and natural gas, while also requiring additional alternative energy sources like ethanol and other renewables.
Canada is the United States’ number one supplier of imported oil and natural gas. In 2008, Canada shipped nearly one million barrels per day more oil and refined products to the U.S. than did our second largest supplier of imported oil and refined products. About half of the Canadian crude oil brought into this country is derived from oil sands.
Canada sends more than 99 percent of its oil exports to the United States, the bulk of which goes to Midwestern refineries.
Canadian oil reserves are vast and are second only to Saudi Arabia, using current technology. Oil sands now account for more than half of western Canada’s total oil output, according to the Canadian Association of Petroleum Producers.
By 2020, Canadian oil sands production is expected to rise from about 1.2 million barrels per day to about 3.3 million barrels per day.

Public Policy Primer - 5/4/2009 8:59:13 AM

Mon, 04 May 2009 08:59:13 -0500

The United States is at an historic turning point for the country and its energy policies. The political campaigns are over and the real work must now begin.

API has assembled this primer in order to encourage a constructive public policy debate that leads to a new fact-based comprehensive energy policy. Now more than ever – in this time of financial crisis -- our nation needs to move away from the energy politics that have failed so badly over the past decades and get to work putting our nation’s own resources to work for American consumers.

View the full primer to learn more about energy and public policy.

Topics covered in this primer include:

Future U.S. Energy Demand
OCS Resources
Access to Domestic Sources
Idle Leases
Taxes Paid by Oil Verses Manufacturing Companies
What Consumers Are Paying
Earnings by Industry
Who Owns the Oil Companies?
Policy Framework
Carbon Mitigation
CO2 Fuel Emissions
Policy Recommendations

Voters Support Offshore Development - 4/22/2009 10:38:54 AM

Wed, 22 Apr 2009 10:38:54 -0500

Most American voters support increasing access to domestic offshore oil and natural gas resources and would oppose any new laws or regulations that blocked development of those national resources, according to a poll conducted earlier this year.

The poll, conducted by Harris Interactive and commissioned by the American Petroleum Institute, found that 61 percent of Americans who voted in the 2008 presidential election support access to offshore oil and natural gas resources. Only 26 percent of those polled opposed exploration and development of those resources.

The results provided fresh evidence of continuing and strong support for developing America’s vast energy resources that was voiced in polls before and after last November’s elections.

Other results included:

Fifty-seven percent would oppose regulations or laws that either delay or block domestic oil and natural gas production. Only 28 percent would support such actions.
And 50 percent said they would “oppose delaying the offshore oil and gas drilling plan,” referring to a recent decision by the Obama administration to delay by six months the regulatory process leading to offshore leasing.
“Americans continue to tell us that they want access to the oil and natural gas that lie offshore in the Outer Continental Shelf and the Gulf of Mexico,” said API President Jack Gerard. “They understand these resources can be safely developed and will fuel economic growth, create jobs, generate plentiful tax revenues and reduce our nation’s dependence on foreign oil.”
“We should not delay the development of these vital national resources,” Gerard added. “Americans need this energy now and will need it to power an economic recovery in the future.”

"Idle" Leases, Exploration and Process - 4/21/2009 12:38:01 PM

Tue, 21 Apr 2009 12:38:01 -0500

It is not unusual for companies to invest $100s of millions to evaluate leases. If the company does not develop the lease within a certain period of time, it must return it to the federal government, forfeiting all its costs.

The criticism of the oil and natural gas industry is that it seeks greater access to our nation's resources under federal lands when companies already own many leases that are allegedly sitting there, undeveloped and producing nothing. There are now even calls for oil companies to be denied new leases, if they have "unexploited" leases. To many, this criticism may sound reasonable. However, these claims of "idle" leases are based on a lack of understanding of the mechanics and due process involved in oil and natural gas exploration and production.

A brief explanation:

A company buys a lease because it believes there is a possibility the lease may yield enough oil or natural gas to make the cost of the lease, and the costs of exploration and production, commercially viable. Over the past five years, companies paid billions to obtain federal leases. However, until a company actually completes exploration, it does not know whether a lease will be productive and commercially viable. Many will not.
Typically, geological exploration; a governmentrequired permit request for seismic work and the work, itself; data analysis; and another government-required permit request for drilling and the work, itself, are needed to verify that sufficient resources can be recovered. These take time, especially the permitting. Moreover, even if initial drilling finds commercially viable amounts of oil and gas, a number of time-consuming steps must follow before production can begin. The lease holder must drill delineation wells to size the field, obtain further state and federal government permits, and engineer and install complex production facilities.
If the company finds there is no oil or natural gas underneath a lease – or that there is not enough to justify the huge investment needed to bring that energy to the surface – the company moves on to more promising leases. Yet, it continues to pay rent on the lease, atop its original leasing bonus fee. In addition, if the company does not develop the lease within a certain period of time, it must return it to the federal government, forfeiting all its costs. All during the aforementioned active exploration and evaluation phase, the lease is listed as "nonproducing."

Because a lease is not producing, critics say it is "idle" when, in reality, much more often than not, it is being actively explored and developed.

Our companies have made tremendous strides in developing cutting-edge exploration technology, but they cannot produce oil or natural gas where it does not exist. In many cases, companies find that a significant percentage of their leases simply may not contain oil and natural gas, especially in commercial quantities. Were they to continue to spend millions of dollars to develop those leases, they would be accused of vacating their fiduciary responsibilities.

Oil and natural gas companies put a lot of time, money and effort doing exploration in the hopes of finding enough oil and natural gas to produce in commercial quantities. Exploration is not a risk-free proposition, but it is an absolutely essential part of our business. There is nothing "idle" about it. Exploration that took place years ago is providing the fuel that is meeting consumer demand today.

A lease is simply a block on a map. When a company buys a lease, it does not buy oil and natural gas; it buys the right to explore whether there is oil and natural gas on that block. If every lease had oil and natural gas, we wouldn't need to explore. One could simply pay for a lease, punch a hole in the ground and start pumping oil.

The proposal to deny new leases to companies with socalled "idle" leases exposes a serious flaw in how the fundamentals of our industry are understood. If enacted, it would keep locked up underground even more of America's vast energy resources and seriously harm our ability to produce sufficient energy to meet the continued steady demand. At the same time, more oil and natural gas imports would result, and American jobs would go overseas.

Just as Congress would not dream of requiring farmers to plant crops in the portion of their acreage that is marshland, it should not force our companies to spend millions of dollars on non-promising leases to qualify to bid on new leases.

If our economy is to grow in an increasingly competitive global marketplace, our companies must be allowed access to the areas that we expect have the potential to produce the oil and natural gas consumers will need.

Today’s short-term need was yesterday's long-term opportunity. If Congress had acted on that opportunity years ago, America would not be in the energy bind it finds itself today.

Energy Security - 4/21/2009 12:01:35 PM

Tue, 21 Apr 2009 12:01:35 -0500

Our nation needs a public policy framework that ensures future energy security for our nation. We need elected and appointed officials who understand the energy challenges we face. We need a greater commitment to increased energy efficiency. We need to diversify our energy resources, drawing upon the full range of energy sources, including alternatives. And, we need to enhance energy technologies, remaining on the cutting edge of advanced technology.

But of utmost importance, America needs policies that promote greater supplies of oil and natural gas, not policies that hinder the industry’s ability to provide consumers the energy they demand and need. The U.S. could significantly improve its energy security by allowing access to domestic oil and gas resources.

A recent study from ICF International shows more access to domestic energy resources could generate $1.7 trillion in government revenue, create thousands of new jobs and enhance America’s energy security by significantly boosting energy production here in the United States.

The study, commissioned by API, shows that developing offshore areas previously off-limits to exploration, as well as ANWR and a small portion of off-limits land in the Rockies, would increase U.S. crude oil production by as much as two million barrels per day in 2030, offsetting nearly a fifth of the nation’s imports. Policies that will allow energy companies to make the most of the energy resources we have here at home are crucial to the U.S. economy. We need to get it right on energy. Too much is at stake for our nation to do otherwise.

Access to Oil and Gas Resources Primer - 4/6/2009 8:48:09 AM

Mon, 06 Apr 2009 08:48:09 -0500

On October 1, 2008, Congress lifted the federal ban on offshore drilling that had kept 75 percent of U.S. coastal waters in the lower 48 states off limits to development for nearly three decades. Another 10 percent remains off limits in the Eastern Gulf of Mexico.

Policymakers and consumers alike have many questions about offshore drilling, so API has assembled a primer to foster an informed, constructive public policy debate and to demonstrate how the safe, efficient and environmentally conscious development of America’s vast oil and natural gas resources will help meet our growing energy needs, create new jobs, provide more revenue to federal and state governments and enhance our energy security.

Topics include:

Access to Domestic Sources
Future U.S. Energy Demand
Global Energy Demand
OCS Resources
Atlantic and Pacific Resources
Eastern Gulf of Mexico Resources
Idle Leases
Seismic Technology has Revolutionized the Search for Oil and Natural Gas
Offshore Rigs and Platforms
Subsea Technology: Production Cities under the Sea
Oil Spill Prevention
Using American Resources in America

Access Counter - 2/17/2009 11:22:44 AM

Tue, 17 Feb 2009 11:22:44 -0600

The development of America’s vast domestic oil and natural gas resources that had been kept off-limits by Congress for decades could generate more government revenue, create new jobs and significantly boost domestic production.

Want to learn more about increased production, decreased imports, and the cars and homes that could be powered by untapped U.S. resources? The API Access Counter enables you to explore resources and regions to understand the benefits of increased energy exploration.

Facts about Non-Producing Leases - 1/28/2009 5:02:13 PM

Wed, 28 Jan 2009 17:02:13 -0600

The facts about non-producing federal leases:

CLAIM: Oil and natural gas companies are given leases by the government and purposely don’t produce from them to increase prices.

FACT: Companies pay billions of dollars for the right to explore on federal lands. If the company does not produce within the lease term, it must give the lease back to the government, and the company does not recover the billions of dollars it may have invested.

CLAIM: Companies let many of their leases sit idle and don’t produce them.

FACT: Companies actively develop their leases – but not every lease contains oil or natural gas in commercial quantities. In many cases, the so-called “idle leases” are not idle at all; they are under geologic evaluation or in development and could be an important source of domestic supply. However, this does not mean all leases have the potential to produce. Companies can evaluate leases for several years only to determine that they do not contain oil or natural gas in commercial quantities. The road to bring the oil and natural gas to market -- obtaining the lease, evaluation, exploration and production -- is a long and complicated one.

CLAIM: If the lease doesn’t contain oil or natural gas, then the company shouldn’t have bought it.

FACT: There are tremendous risks and challenges involved in finding and producing oil and natural gas. There is no guarantee that a lease will even contain hydrocarbons. It is not unusual for a company to spend in excess of $100 million only to drill a dry hole. A company usually has only limited knowledge of resource potential when it buys a lease. Only after the lease is acquired, will the company be in the position to evaluate it, usually with a very costly seismic survey followed by an exploration well.

CLAIM: There’s absolutely no reason for a company not to produce if it finds oil or gas on the lease.

FACT: If the company finds resources in commercial quantities, it will produce the lease. But there can sometimes be delays – often as long as seven to 10 years – for environmental and engineering studies, to acquire permits, install production facilities (or platforms for offshore leases) and build the necessary infrastructure to bring the resources to market. Litigation, landowner disputes and regulatory hurdles can also delay the process.

CLAIM: The vast majority of federal oil and natural gas resources are already available for development.

FACT: In the Lower 48 states, about 67 percent of onshore federal lands are off-limits or facing significant restrictions to development. While the moratoria banning Outer Continental Shelf leasing off the Atlantic and Pacific Coasts was lifted October 1, 2008, several key steps remain before actual leasing, and then development, can take place.

CLAIM: Non-producing leases could provide a major source of new supplies.

FACT: Many of these leases will provide a major source of new domestic supply once they are developed. Companies are actively developing the leases, and in addition to paying for the lease, they must also pay rent to the government while they conduct development and exploration efforts. But this process takes time. Reducing the time companies have to develop a lease or increasing the costs imposed by government will not increase supply for American consumers. Nor will denying access to areas of oil and natural gas potential like the Atlantic and Pacific OCS.

CLAIM: Increased domestic drilling activity has not led to lower gasoline prices, and more leases and drilling won’t help either.

FACT: Our nation needs more supplies of all forms of energy, including domestic oil and natural gas, to meet its growing energy demand. Increased drilling has helped the United States offset the natural declines in domestic oil and natural gas production from older fields. Greater drilling activity tends to produce more supply. Fundamental economics suggest that additional supplies put downward pressure on prices.

CLAIM: Companies should be penalized for not producing from their leases.

FACT: Oil and gas companies take all the risk with federal leases. Not only do they pay billions to obtain leases, they pay to hold them while they are spending even more capital to determine if these leases contain resources. Penalties on leaseholders on top of those fees would only discourage U.S. exploration and production, at a time when the United States needs all the energy it can get.

Global Access and Energy Independence - 1/16/2009 4:38:18 PM

Fri, 16 Jan 2009 16:38:18 -0600

The importance of increasing access to domestic sources of oil and natural gas could not be clearer.

Experience has shown that we can not rely on any single source of energy — whether domestic or global. We should have as great a diversity of sources as possible, including sources from around the world.

We learned this during Hurricanes Katrina and Rita. There were no significant offshore oil spills, which meant our infrastructure performed well, but supplies were disrupted when nearly all production in the Gulf of Mexico was temporarily shut down. Yet we were able to meet the nation’s demand because we were able to tap product supplies from Canada and Europe.

We need policies that support our need to participate actively in global energy markets — not policies that isolate us.

Right now, American companies manage just 2.5 percent of global oil and natural gas reserves.

In fact, the total amount of reserves managed by all investor-owned companies (such as ExxonMobil, Chevron, BP, Shell, and others) is just 6 percent. Almost 80 percent is exclusively controlled by foreign governments.

Other countries know this. Look at Russia, which is doing everything it can to develop its resources often for economic and political gains. Or consider China, which is exploring resources around the world — including off our shores — to meet its exploding demand at home.

With global demand skyrocketing, not having a greater share of the world's oil and natural gas supplies is a threat both to our national security and our economic prosperity.

It's understandable that people want to believe in "energy independence." But consider this, in 1980, America imported 36 percent of our oil — today we import 60 percent. And by 2030, despite aggressive efforts to reduce consumption through incentives for alternatives and conservations, we will import 61 percent of our oil, according to the Department of Energy.

The Washington Post summed it up well earlier this year in a lead editorial. After declaring energy independence "the wrong target for policymakers," the Post wrote: "true energy security comes not so much from energy independence as from diverse sources of supply."

At a time when global competition for energy resources grows fiercer by the day, the United States must do everything it can to access resources around the world.