Most oil-gas leases are not producing

Tuesday, June 1, 2004 | 11:07 a.m.

SUN STAFF AND WIRE REPORTS

WASHINGTON -- Nearly three-fourths of the 40 million acres of public land currently leased for oil and gas development in the continental United States isn't producing any oil or gas, federal records show, even as the Bush administration pushes to open more environmentally sensitive public lands for oil and gas development.

An Associated Press computer analysis of Bureau of Land Management records found that 80 percent of federal lands leased for oil and gas production in Wyoming are producing no oil or gas. Neither are 83 percent of the leased acres in Montana, 77 percent in Utah, 71 percent in Colorado, 36 percent in New Mexico and 99 percent in Nevada.

Richard Burdette, energy advisor to Gov. Kenny Guinn, said this morning that the oil drilled in Nevada has been of low quality and is used primarily for producing asphalt. Some of the oil also is used to produce diesel fuel. About 1.5 million barrels are drilled in the state's Railroad Valley each year. All indications have been that there are little or no natural gas reserves in Nevada.

Burdette said the quality issues are a likely reason for the low percentage of leased land being used for drilling.

"I don't know the mechanics or strategies that are considered when companies go about making such leases," he said. "I'd be surprised if it isn't more tied to the quality of oil that's been found."

Burdette did, however, indicate that as prices rise, the value of that oil could be increasing. While he said that the state leaves refinery operations to private companies, an informal study of the state's oil reserves will be performed.

"I don't know that we have a full understanding of what kind of oil we have, how deep it is, other stuff like that," he said. "Given the market conditions, we better find out a little more."

How much exploration has occurred on the nearly 30 million acres of non-producing public land leases is difficult to say. BLM officials could provide no details on the number of exploratory wells drilled on those leases, despite repeated requests for that information over the past two months.

But with so much public land already available for exploration, environmental groups and local landowners are questioning why the Bush administration is pushing to lease still more federal land to the oil and gas industry, particularly in areas that the groups and some lawmakers want protected as federal wilderness areas.

"The aggressive leasing of public land pushed by the Bush administration is a land grab, pure and simple, giving industry more and more control over public land while costing taxpayers millions of dollars," said Peter Morton, a resource economist with the Wilderness Society.

Morton said the leases, which companies can lock up for 10 years with annual rents of only $2 to $3 an acre, are an economic boon to some companies because they count as assets that can make debt refinancing easier while also attracting potential investors.

The Energy Task Force headed by Vice President Dick Cheney asked the BLM three years ago to find ways to open new federal lands to oil and gas leasing and to speed up the approval of drilling permits. To meet increased demand for natural gas, the task force said drilling on federal land will have to double by 2020.

Interior Secretary Gale Norton agreed in settling a lawsuit with Utah last year to halt all reviews of public lands in the West for new wilderness protection and to withdraw that protected status from some 3 million acres in Utah.