Study: 20 million acres of federal oil, gas leases in Gulf of Mexico idle

Mikhail Metzel/AP - FILE - In this Oct. 18, 2012 file photo, a woman walks outside the TNK-BP headquarters in Moscow, Russia. British oil company BP says it has agreed to sell its stake in its TNK-BP joint venture to Russian oil company Rosneft for US$17.1 billion in cash and a 12.84 percent stake in Rosneft. BP announced Monday, Oct. 22, 2012, that it would use some of the money to buy more shares in Rosneft to raise its stake to 19.75 percent. (AP Photo/Mikhail Metzel, File)

Oil and natural gas companies are not exploring, developing or producing on more than 20 million acres of federal leases in the Gulf of Mexico, 40 percent of them owned by the five biggest private oil giants, according to a study by the office of Rep. Edward J. Markey (D-Mass.), the ranking member of the House Natural Resources Committee.

The study is the latest salvo in a politicized election year battle over whether the Obama administration should be blamed for what Republican presidential nominee Mitt Romney has called a slow pace of leasing or whether the oil industry owns more drilling leases than it can handle.

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The study found that 131 oil and gas companies hold about 3,700 leases in the Gulf of Mexico that are not undergoing exploration, development or production.

BP has 2.5 million acres of idle leases in the Gulf of Mexico, the report said. BP is followed by Chevron, Exxon Mobil and Shell, each of which own 1.4 million to 1.5 million acres of idle leases.

Markey’s study added that about half of the leases have been idle for at least five years and that 80 percent of the idle leases were purchased for less than $300 an acre.

Many Democratic lawmakers have pressed in recent years for “use it or lose it” legislation to compel oil companies to exploit their federal leases.

But major oil companies have argued that the current system, which already uses a “use it or lose it” structure, works fine. Oil companies bid for federal leases and generally have 10 years to explore a lease or let the acreage revert to the federal government, which can then put the leases up for auction again. The companies, especially those exploring deep-water offshore leases, say they need time to carry out surveys and contract for a rig.

Recently, BP has been the company most actively drilling in the Gulf of Mexico. It would not comment on the study.

Some members of Congress, including Markey, want to push companies harder to develop their leases by imposing a system of escalating surcharges as idle leases get older.

The Interior Department has raised royalties, lease rates and minimum bids.

During the second presidential debate, President Obama said: ““Here’s what happened. . . . You had a whole bunch of oil companies who had leases on public lands that they weren’t using. So what we said was, you can’t just sit on [these leases], decide when you want to drill, when you want to produce, when it’s most profitable for you. These are public lands. So, if you want to drill on public lands, you use it or you lose it.”

Romney has contended that the pace of federal leases has been too slow, an argument that has also been made by the American Petroleum Institute.

But even some oil analysts say that it has been of little surprise that leasing in the Gulf of Mexico was temporarily slowed by the massive oil spill there in 2010, which prompted an overhaul of the agency dealing with offshore leasing and inspections.

Fadel Gheit, an oil analyst with Oppenheimer and Co., said that complaining about the pace of leasing in the gulf in the wake of the spill was like complaining that a motorist was not driving fast enough after coming to a highway accident and car pileup.

 
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