Udall, Pearce Again Face Off Over Oil
Posted on: Saturday, 28 June 2008, 15:02 CDT
By STEVE TERRELL
Bill forcing companies to use leases or give them up wins Democrat's support
Oil: Domenici says companies take on high upfront costs
Once again, U.S. Senate candidates Tom Udall and Steve Pearce have found themselves on opposite sides of an energy issue facing Congress.
On Thursday in the House of
Representatives, Democrat Udall voted for and Republican Pearce voted against a bill to force oil
companies to use or lose 68 million acres of federal oil and gas leases.
A majority of the Democratic-controlled House voted for the Responsible Federal Oil and Gas Lease Act, sponsored by Rep. Nick Rahall, D-W.Va. However, the 223-to-195 vote fell short of the two- thirds majority needed to pass it under the special procedural rules that were used to bring it to a vote.
"The oil companies have the land they need to boost American oil production now," Udall said in a news release, "but they are not using it. It is time to tell the big oil companies to stop sitting on America's oil supply waiting for the price to get even higher. They need to start drilling on the land the American public leased to them. I am disappointed that a minority in the House was able to let big oil companies continue to hoard leases."
Pearce didn't issue a statement on the vote and couldn't be reached for comment.
A fact sheet on the bill by the House Natural Resources Committee, which Rahall chairs, said unlike coal companies, oil and gas companies have "no diligent development requirements" and can stockpile leases in a nonproducing status.
"This has encouraged oil and gas companies to hold nearly 68 million areas of federal land (both onshore and under outer- continental-shelf waters) without producing oil or gas," the fact sheet says. These leases could produce an additional 4.8 million barrels of oil and 44.7 billion cubic feet of natural gas each day, which would nearly double total U.S. oil production, and increase natural gas production by 75 percent, according to the information. "It would also cut U.S. oil imports by more than a third, and be more than six times the estimated peak production from the Arctic National Wildlife Refuge," the fact sheet said.
It argues that companies leasing federal coal resources are required to diligently develop their leases, and says: "This requirement has discouraged the rampant speculation that once existed in the federal coal leasing program, the same type of speculation that now appears to be plaguing the federal oil and gas leasing program."
However, in a speech to the U.S. Senate this week, Sen. Pete Domenici, R-N.M., said Democrats' arguments about the "use it or lose it" legislation are flawed.
"There are many different steps toward producing oil, and at any given moment, a lease may not be producing, but it is active and under development," Domenici said. "In the 5, 8, or 10 years that a company holds a lease, environmental assessments could be under way, lessees could be trying to secure permits, the leasing agency could be challenged in litigation, and a lessee could be reviewing seismic data. In fact, any number of pre-production processes could be under way. I do not hear critics suggest that we speed this up or that we waive or shorten environmental requirements -- and I am not suggesting that either."
Domenici also argued that companies must take on significant upfront costs to acquire an oil and gas lease. "Bonus payments and pre-production rental payments often cost million of dollars, and these capital investments are only being made for the ultimate development and production of oil to return a profit on investment," he said. "Simply put, if oil is not produced from a lease, companies lose money on it."
Domenici said, "Simply because you lease lands does not necessarily mean that you are able technically or economically to produce on them -- or even that there is oil under your lease."
Contact Steve Terrell at 986-3037 or sterrell@sfnewmexican.com.
(c) 2008 The Santa Fe New Mexican. Provided by ProQuest Information and Learning. All rights Reserved.
Source: The Santa Fe New Mexican
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