EnergyFactor By ExxonMobil | Pespectives has a new home

Production up on private lands, down on federal lands

“So here’s what I’ve done since I’ve been president,” said President Obama during one of last fall’s debates. “We have increased oil production to the highest levels in 16 years. Natural gas production is the highest it’s been in decades.” The White House website makes similar assertions.

Such claims are, technically, true.

But those statements do a poor job of telling the investment and innovation story behind the transformative impact of hydraulic fracturing and horizontal drilling.

A fuller picture is being drawn by the federal government’s Energy Information Administration. In a recent report, EIA provides the sort of context sorely lacking from the administration’s accounts of oil and gas production.

For example, according to EIA:

Since FY 2003, fossil fuel sales volumes on federal and Indian lands dropped 15 percent, driven by declines in offshore natural gas production and to a smaller extent by offshore oil production. However, that decline was outweighed by the 27 percent increase in fossil fuel production on nonfederal, non-Indian lands from 2003 to 2012, so that total U.S. fossil fuel production increased 11 percent over that period.

The game-changing nature of energy from shale – which has created 1.7 million new jobs and is giving a shot-in-the-arm to American manufacturing – is the product of innovations that are taking place on non-federal lands.   In other words, Washington’s role and influence have been minimal, at best.

Forget the White House spin. The lion’s share of the credit goes to free markets and our nation enabling a cooperative effort by private landowners, state regulators, and the men and women of America’s energy industry who have pioneered innovative ways to extract oil and gas once thought inaccessible.

It’s ironic the administration is claiming credit for the increase in production, since Washington deserves some blame for the drop-off from federal lands. Actions taken to slow the pace of offshore drilling in the wake of BP’s 2010 oil spill have played a part, as have efforts to withdraw leases for shale-oil development in Colorado, Utah, and Wyoming.

Unfortunately, it’s hard to see how the federal government’s current 2012-2017 offshore leasing plan – which keeps the vast majority of U.S. offshore areas off-limits – will reverse this trend.

Surely there are lessons to draw from the EIA’s newest set of eye-opening numbers. Let’s hope our policymakers in Washington learn from them, for the sake of jobs, economic growth, government revenues and energy security.

  • Worth a deeper look...