GAO Urges Interior to Speed Oil Drilling on Federal Land

Associated Press
Wednesday, November 5, 2008

The government isn't doing enough to expedite drilling in federal waters and on public lands, according to a report issued yesterday by congressional investigators.

In a review of the 55,000 federal oil and gas leases issued to energy companies by the Interior Department from 1987 to 1996, the Government Accountability Office found that the majority expired without any drilling and that few actually produced oil and natural gas.

"We do not agree that Interior is pursuing expedited development of oil and gas leases," the report says.

Energy companies hold leases, but are not producing on, about 68 million federal acres -- property with the potential to double domestic oil production. About a third of the oil produced in the United States last year came from public lands.

As an alternative to opening more federal property to drilling, House Democrats and Sen. Barack Obama (D-Ill.) have said companies should "use it or lose it": drill on lands they rent, or lose the right to obtain new leases.

House Natural Resources Committee Chairman Nick J. Rahall II (D-W.Va.), who sponsored "use it or lose it" legislation this year, said the report validates his "long-held belief that oil and gas companies can, and should, be doing more to develop those leases."

The GAO found that practices to expedite drilling, such as increasing the rent on federal lands not being drilled, did not do enough to spur production. About 26 percent of offshore leases and 6 percent of federal leases on land issued from 1987 to 1996 had been drilled by last year. The percentage that produced oil and gas was smaller -- 12 percent offshore and 5 percent on land.

The report recommends that the department consider measures used by states and private landowners to jump-start drilling, such as offering a lower royalty rate for faster production and shortening the term of the lease.

In a letter of response, Assistant Interior Secretary C. Stephen Allred said environmental reviews delay development on federal land. He also said faster production in some areas could have "adverse consequences," but he did not elaborate.

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