Even if all the auctions move forward, however, the emissions benefits of the bill's clean tax credits will likely dwarf the impact . "Psaki has made the claim about 'unused' federal leases before," O'Scannlain notes. Production peaked at 13 million barrels a day under the Trump administration. If you came to me and said, Mike, heres $100 million. To be clear, Biden wasnt wrong about that number, but citing it as evidence that energy companies are sitting on their hands to keep prices high needs a bit more context. Companies have to contract rigs to drill the wells, and build a sufficient inventory of permits before rigs are contracted, said Jennifer Pett, a spokesperson for the Independent Petroleum Association of America, a trade group that represents oil and natural gas producers. So you get the mineral position leased, then you have to go to the surface owner and negotiate good terms and a good understanding of how youre going to use his surface and make him happy, so that you can come out here and start doing all the stuff that we have to do to get to and from our wells, Cohorn said. While the cost to extract one barrel in Saudi Arabia is somewhere around $10 or $15, in West Texas it can be as high as $70, Gernot Wagner, an associate professor of environmental studies at New York University, told PolitiFact. Even then, he said, getting oil out of the ground takes time. TheU.S. Energy Information Administrationin January forecasted that U.S. oil production will average 12.4 million barrels per day during 2023, surpassing the record high for domestic crude oil production set in 2019. They could be drilling right now, yesterday, last week, last year.". This is where were parked, right here on the edge of this big frack pit.. Video shows President Joe Biden recalling an alien encounter. Douglas Holtz-Eakin, an economist and president of the American Action Forum, a center-right think tank, said firms are trying to assess the durability of the global rebound. And of the remaining 10% that occurs on federal land, the oil and gas industry has millions of acres leased," Biden said. They could be drilling right now, yesterday, last week, last year. But its not as simple as Biden made it seem, because there are some steps before companies begin production. some 40% of the mineral acreage leased by companies goes unused . As a result, Henry Resources has been standing by with an unproductive well for two months. Quotes displayed in real-time or delayed by at least 15 minutes. Oil production on federal lands fell to 12.28 million barrels per day in November, the latest month with data. They could be drilling right now, yesterday . So this is a map of our acreage, he said, referring to an area between 6,000 and 7,000 acres in size. The law already requires companies to either produce oil and/or gas on leases or return the leases to the government the so-called use it or lose it provision generally in the first 10 years. Oil production on federal lands fell to 12.28 million barrels per day in November, the latest month with data. Wednesday's Energy Absurdity of the Day: Is it '9,000 Unused Leases' or '9,000 Unused Permits?' The White House Doesn't Seem to Know. U.S. President Joe Biden wants oil drillers to pay penalties when federal leases go unused in an effort to prod the industry into pumping . From a federal regulatory standpoint, once a permit is approved, industry can proceed. The decision, which halts the potential to drill for oil . As Sommers noted in a recent blog, the administration should provide clarity on federal leasing and permit energy infrastructure. Those permits . During Bidens first year in office, the U.S. produced an average of about 11 million barrels of crude oil per day compared to Trumps 9 million barrels per day in his first year. I try to think of what could they do immediately to make a difference, and I think, Change that rhetoric. Thats an easy thing to do, he said. Published under: All rights reserved. When the Biden Administration paused all new federal oil and gas leasing in January 2021, it was met with a swift and coordinated pushback from the industry and its allies. His latest ploy is to place a "use it or lose it" fine on unused oil leases that take years to develop and millions of dollars. The EIN for the organization is 59-1630423. The DOI has delayed issuing a congressionally five-year plan for offshore drilling and is weighing a complete block on such leasing through 2028. The Biden administration quietly updated a federal database showing how many unused oil and gas drilling permits it has approved, reducing the number by more than 2,000.. Cohorn at Henry Resources said his land and legal crew started acquiring mineral leases in 2016. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you. center for media and democracy logo Government policies can either discourage or encourage oil producers to take the risk of investing billions of dollars, plus considerable time and effort, to find out whether or not the lands they lease are viable sources of oil. However, once the permit is approved, drilling doesnt start overnight. A crew of roughnecks were on a platform sending metal pipes down the well to try to get it unclogged. This material may not be published, broadcast, rewritten, He knows that changing the tone in Washington wont get him the steel pipe, sand and workers he needs for his rigs. Legal Statement. Before drilling can occur, the lease holder has to get a federal permit. Some companies choose not to drill for corporate reasons because they can raise funds from investors by not drilling on leases with proven reserves. The Bureau of Land Management (BLM) revised the current number of approved applications for permits to drill (APD) which oil and gas companies are required to file once they identify a deposit on a lease that can be tapped down from an estimated 9,000 to less than 6,700. There are more than 9,000 permits to drill oil on federal lands, as President Biden . "They have to be sure that the costly investment (and time) that it takes to turn a lease into a producing well is worth it.". Here is the average price in each state. Biden has a point that the U.S. produced more during his first year than Trumps first year. Biden's Interior Department quietly updated its list of unused permits to reflect a much lower figure: 6,600, E&E News reported Monday. The oil industry already has at least 10 years' worth of unused leases at its disposal, even with the leasing pause. President Joe Biden said that his policies have not made the U.S. less equipped to withstand the impact of the ban on Russian energy imports. Get the Poynter newsletter that's right for you. There is actually an incentive for the companies not to develop these resources because for publicly traded companies, these reserves get reported and influence market valuation, Daigle said. "It is time for the administration to end the finger-pointing and instead support American production with a comprehensive strategy for American energy developmentone that includes a final five-year program for offshore leasing and quarterly onshore lease sales," the institute said in a statement. 2023 FOX News Network, LLC. At the end of 2021, there were 9,173 approved and available permits to drill on federal and Indian lands. The current situation is a reminder that American energy abundance requires foresight and planning, investment and policy support. 5 relinquished oil and gas leases. There is actually an incentive for the companies not to develop these resources because for publicly traded companies, these reserves get reported and influence market valuation, Daigle said. , Biden said the oil industry has "9,000 permits to drill now. The sand and water necessary for fracking are hard to come by too. With Russian tanks encircling Kyiv and Russian artillery pounding Ukrainian civilians, the importance of American energy could hardly be clearer. "There are 9,000 unused, approved drilling permits. . Psaki has made the claim about unused federal leases before. UPDATE: On March 31, President Joe Biden announced the release of 1 million barrels of oil per day from the nation's Strategic Petroleum Reserve over the next six months. The president suggested the onus is on the industry to start drilling. "Theyre not drilling. The industry could move forward with the permits that it has that are currently unused and could ramp up domestic oil production to replace Russian oil, but these moves take time. Were a company running two rigs. Fossil Fuels In addition to Biden, top administration officials such as National Security Council spokesman John Kirby and former White House press secretary Jen Psaki have used the 9,000-permit talking point to argue that the oil and gas industry has "plenty of opportunities to drill here in the United States." But it does import some of its oil from Russia, Feb. 28, 2022, PolitiFact, The U.S. did not double oil imports from Russia in the last year, Feb. 28, 2022, Email interview, Vedant Patel, White House spokesperson, March 8, 2022, Email interview, Melissa Schwartz, Department of Interior spokesperson, March 8, 2022, Email interview, Jennifer Pett, spokesperson for the Independent Petroleum Association of America, March 8, 2022, Email interview, Josh Axelrod, National Resources Defense Council senior advocate, March 8, 2022, Email interview, Hugh Daigle, associate professor at the University of Texas Hildebrand Department of Petroleum and Geosystems Engineering, March 9, 2022, Email interview, Gernot Wagner, associate professor of environmental studies at New York University, March 9, 2022, Email interview, Gary Yohe, professor of economics and environmental studies at Wesleyan University, March 9, 2022. Previously, he worked as a reporter for Axios, where he covered, Amy Sherman is a staff writer with PolitiFact based in South Florida. This is false. Market data provided by Factset. Now, his own administration is acknowledging that's wrong. A federal judge has revoked oil and gas leases sold in the Gulf of Mexico in November, saying the Interior Department did not take into account its impact on climate change. "Producers also have to put a drilling plan together, secure rights of way and work with state and private landowners," Pett said. Biden said the oil industry has "9,000 permits to drill now. Onshore, of the more than 26 million acres under lease to the oil and gas industry, nearly 13.9 million (or 53%) of those acres are unused and non-producing. Editors note, Feb. 28, 2023: This fact-check of President Joe Bidens statement in March 2022 was based on available data at the time from the Bureau of Land Management. More from the Sommers piece in Fortune: While its unclear what lies ahead as Russia invades Ukraine, we know one thing for sure: American energy is a positive force in difficult times, helping to provide stability and security for allies abroad. Companies have to contract rigs to drill the wells, and build a sufficient inventory of permits before rigs are contracted, said Jennifer Pett, a spokesperson for the Independent Petroleum Association of America, a trade group that represents oil and natural gas producers. The revenue reported includes the first year's rent of $1.50 per acre, a bonus bid of not less than $2 an acre, and an administrative fee. With oil at $120 or more, drilling there is wildly profitable.". Biden said the oil industry has 9,000 permits to drill now. The BLM, a subagency of the Department of the Interior (DOI), blamed the revision on a Trump-era technical change that it hadn't properly accounted for. 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