Entries in Drilling (3)


Obama Tells Oil Industry to Drill Idle Leased Land

Digital Vision/Thinkstock(WASHINGTON) -- After a drumbeat of complaints from energy companies that the Obama administration is blocking domestic oil and gas production, the Interior department released a report claiming that U.S. oil and gas producers are sitting on millions of acres of idle government land leases.

Secretary of the Interior Ken Salazar says that if producers were sincere about wanting to increase energy production, they would activate millions of acres of public land already leased to them. What should they be doing on that land? Drilling.

In a statement issued Tuesday, Salazar says the administration wants companies "to develop the tens of millions of acres they've already leased but have left sitting idle."

A report released by the Department of the Interior claims that of 36 million government acres leased offshore for oil and gas production, 72 percent sit idle. Onshore, in the lower 48 states, says the report, more than half of federally leased acreage sits idle, "neither producing nor under active exploration or development by companies who hold those leases."

The American Petroleum Institute calls the administration's claim "absurd" and "willfully misleading."

In a statement, API CEO Jack Gerard says that just because a lease doesn't fit the government's definition of active doesn't mean it's idle. Where a lease truly is idle, the reason often is that the producer must hold off drilling while they wait years to get the necessary government permissions.

Erik Milito, API director of upstream and industry operations, says there's another reason some leases aren't being used: There's only a 30 to 40 percent success rate to finding oil. A producer has to narrow down its leases to find the few ones good enough for drilling.

The fallacy behind Salazar's assertion--which Milito characterizes as being, "we don't have to open up any more public land to you, because you're not using the leases you've already got"--is the belief "that you just put a pipe in the ground, and you're ready to go--that there's always oil there."

Kathleen Sgamma, vice president of government and public affairs for the Western Energy Alliance, whose members produce, she says, 27 percent of the natural gas and 14 percent of the oil in the U.S., cites a more basic reason a lease may be idle: Its oil and gas may be uneconomic to extract.

As energy prices fluctuate, and as technology improves, she says, idle leases are brought into production. The most dramatic and most recent example is the 200,000-square-mile Baaken oil field underlying North Dakota and Montana. As recently as five years ago, she says, many leases here sat idle. Then technology and economics made production possible, and production boomed.

The DOI report, she says, "Actually is useful, since it shows that we're becoming more efficient at operating on public lands. To have 44 percent of public lands in production is very high, compared to the 30 percent it's been historically. There will always be maybe 30 percent of leases that don't pan out. But of the rest, we estimate half are somewhere in the [drilling] process. If government is truly serious about increasing production, they would remove some of the red tape."

The Alliance says that when you add up the time required for prospecting, drilling, and waiting around for government approvals, 19 years can pass before a lessee actually sees oil. During part of that time, the government counts the lease inactive.

She says she knows the government can move energy projects ahead more aggressively when it wants to, because it has done exactly that with wind and solar projects. It's only politics, she says, that accounts for the different treatment accorded oil and gas.

A spokesman for the Department of the Interior, asked to respond to the industry's contention that DOI's report is both misleading and absurd, says, "The report speaks for itself. The notion that we have somehow locked up federal lands clearly doesn't square with the facts. Our goal is to continue expanding safe and responsible development, and we will continue to take steps to deliver on that priority."

Copyright 2012 ABC News Radio


Obama OKs Oil Exploration Along Atlantic Coast, But Not Drilling

File photo. iStockphoto/Thinkstock(WASHINGTON) -- The Obama administration on Wednesday endorsed new oil and gas exploration along the Atlantic Coast, setting the stage for possible future drilling lease sales.

The announcement by the Interior Department sets into motion what will be at least a five year environmental survey to determine whether and where oil production might occur.     

It also comes as President Obama faces mounting pressure over high gas prices and criticism from Republicans that he has opposed more drilling for oil.

“Making decisions based on sound science, public input, and the best information available is a critical component to this Administration’s all-of-the-above energy strategy,” said Interior Secretary Ken Salazar.

But Republicans say the announcement is simply for show. Obama delayed and then cancelled a planned 2011 drilling lease sale for areas off the Virginia coast following the BP oil spill in the Gulf.

There are also no guarantees the administration will approve drilling permits at the end of the environmental review.

“The President’s actions have closed an entire new area to drilling on his watch and cheats Virginians out of thousands of jobs,” said Rep. Doc Hastings, R-WA, who chairs the House Natural Resources Committee.

The announcement “continues the President’s election-year political ploy of giving speeches and talking about drilling after having spent the first three years in office blocking, delaying and driving up the cost of producing energy in America,” he said.

“If President Obama truly wanted to support energy production in the Atlantic, he would immediately reinstate the lease sale that he canceled.”

House Republicans say approving drilling off the Virginia coast would create at least 2,000 jobs and produce 750 million barrels of oil.

Copyright 2012 ABC News Radio


Boom Town: What Brings Thousands of Jobs to One Ohio Town?

The Severstal Wheeling North Works Steel Plant sits empty on the edge of Steubenville, Ohio. The Severstal mill has halted production and has laid off all but a few employees to keep safety and security watch. Operating utilization at US steel mills has dropped to 43 percent, a level not seen since the Depression. Rick Gershon/Getty Images(STEUBENVILLE, Ohio) -- Steubenville, Ohio, may not look like a city sitting on a multi-billion dollar industry. Unemployment there reached 15 percent in 2010, and a now-shuttered steel mill -- which was once the lifeline of the Steubenville economy -- is now just a painful reminder of what used to be.

While the old way is gone for good, a new way has already changed lives.

Two huge shale formations -- the Marcellus and Utica -- lay underneath a five-state region. Steubenville sits right on the epicenter of the Marcellus formation, ready to absorb all the new positions needed to open new and repurposed old wells.

While the formations have been around for centuries, only in the past 10 years have people realized how deep they run. In the past decade the area has been prepped for drilling, which is expected to begin in Steubenville this spring.

With the new influx of job opportunities, many are relocating to Steubenville, hoping to land a well-paying, stable job. Louis McGowan, a Navy veteran who served in the war in Afghanistan, was born in the area but left for Texas in search of work. The new jobs boom allowed him to do something he never believed he'd be able to do: come home. He hopes to be one of the first in line when drilling begins.

In a matter of months, rigs will begin to dot the landscape, and current and former residents -- like McGowan -- hope the money will line their pockets.

More than 300 new jobs have already come to the Steubenville area. And as many as 10,000 more are expected in the next three years. If jobs keep growing at this pace, every adult in Steubenville could be working by April.

"I rolled the dice with everything I had," McGowan said. "It's either make it or bust."

But the environmental impact of fracking -- the process of injecting sand, water and a chemical gel to crack open the shale -- is controversial. Environmentalists say the action of pulling natural gas from the ground can spoil groundwater. But it's a risk the people in Steubenville are willing to take.

Hope stretches throughout Steubenville, a city nestled deep in Appalachian Ohio, and even into the nearby hills of the Wetherell family's property, where family members hope natural gas below ground will mean new life for them.

Their land, once a dairy farm, will soon be leased to a drilling company for thousands of dollars.

"It's peace of mind ... knowing that when the money comes we'll be able to put money away for college for the kids, pay off some debts," said Monica Wetherell.

No one in Steubenville can remember the last time anyone heard of a job that paid as much as $77,000 a year coming to town, but those jobs are coming. There could be more than 200,000 of them in Ohio in the next few years.

The boom doesn't end with the drilling jobs. There were bright spots visible all over the town. A few weeks ago, Scaffidi's restaurant needed only 25 seats. Now, there are seven times more people coming in for lunch. The boom is also expected to mean more businesses, more teachers and more hotels.

Everyone seems to be cashing in.

Jim Berry's company ships sand to the drill sites that just moved to the area. He hopes to employ as many as 80 local residents in a year's time.

How badly does this area need the jobs? "It needs it really bad," said John Weber of the Ohio Workforce Department. "The whole Appalachian area needs it. The state of Ohio needs it really bad."

So do the McGowan's.

"I just want to work. That's about it....I want to work."

Copyright 2011 ABC News Radio

ABC News Radio