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July 21, 2015

Energy Production on Federal Lands Lags Behind Private and State Lands

July 21, 2015
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Oil production from Federal and Indian lands in 2014 rose twelve percent from the previous year and is now up 81 percent since 2008 – 113 million barrels per year in 2008 to 205 million barrels per year in 2014.” Testimony of Neil Kornze, Director, Bureau of Land Management, U.S. Department of the Interior before the House Natural Resources Committee Subcommittee on Federal Lands, July 15, 2015[i]

While the statement above taken from the testimony of Neil Kornze, the Director of the Bureau of Land Management is correct, his statement is highly misleading since most of the 81 percent increase in oil production between fiscal years 2008 and 2014 occurred on Indian lands, not purely federal lands. According to a July report from the Energy Information Administration, between fiscal years 2008 and 2014, oil production on federal lands increased 45 percent, but on Indian lands, it increased 460 percent.[ii] In contrast, oil production on private and state lands increased by over 100 percent over that time period—more than the 81 percent increase of the combined federal and Indian land increases. Further, oil production on federal onshore and Indian lands, under the jurisdiction of the Bureau of Land Management, is small, representing less than 7 percent of the total oil produced in the United States in fiscal year 2014. [iii]

While oil production on federal lands did increase in fiscal year 2014 over fiscal year 2013 levels, all fossil fuels produced on federal lands actually declined by 0.02 percent from fiscal year 2013 levels and by 16 percent from fiscal year 2008 levels. The 16 percent decline in fossil fuel production on federal lands was due to lower production of natural gas and coal. Natural gas production on federal lands declined by 36 percent and coal production by 17 percent over that 7-year time period. Clearly, production on federal lands is dismal compared with production on private and state lands which has made the United States the largest oil and natural gas producer in the world and the second largest coal producer in the world. As a percentage of total fossil fuel production in the United States, federal production dropped from a high of 36 percent in fiscal year 2003—the first year of EIA’s analysis–to a dismal 24 percent in fiscal year 2014. (When fossil fuel production on Indian lands is added to the federal lands production, total fossil fuel production on federal and Indian lands actually increased slightly–by just 0.2 percent.)

Clearly, the Obama Administration is using statistics to pat itself on the back regarding fossil fuel production, when little praise should be given to it since it has spent the last 6 and a half years adding to the regulatory burden and setting policies that disadvantage American companies without caring about the ramifications to the American public.

Fig 1

 

Fig 2
Source: EIA, http://www.eia.gov/analysis/requests/federallands/pdf/eia-federallandsales.pdf

Oil Production on Federal Lands

Crude oil production on federal lands increased 15 percent between FY 2008 and FY 2014. Production in federal offshore increased 9 percent over that period, but declined by 19 percent from the high reached in fiscal year 2010—the year of the Deepwater Horizon accident. Between FY 2008 and FY 2014, federal onshore volumes increased by 45 percent. In FY 2014, the federal offshore still produced most of the federal oil production–77 percent of total federal crude oil production, but its share declined compared with FY 2008 when it comprised 82 percent of all federal crude oil production. For the past six consecutive fiscal years, 2009 to 2014, oil production on Indian lands has increased by 460 percent.

Over the most recent one-year period, oil production on federal lands increased 6 percent, from 614 million barrels in FY 2013 to 651 million barrels in FY 2014. Federal offshore and onshore oil production increased over the last year by 5 percent and 9 percent, respectively. Despite this increase, crude oil production from federal lands as a share of total U.S. crude oil production decreased from a high of 36 percent in FY 2010 to 21 percent in FY 2014. This decrease in the federal lands share of total oil production was due partly to the Obama Administration’s moratorium on offshore drilling after the Deepwater Horizon accident allowing non-federal production on private and state lands to take a larger share.

Sales of crude oil produced on Indian lands increased 22 percent, increasing from 46 million barrels in FY 2013 to 56 million barrels in FY 2014. The increase in oil production on Indian lands was due to increased production on tribal lands in North Dakota (primarily the Fort Berthold Indian Reservation in the western part of the state, part of the Bakken/Three Forks tight oil play) and in New Mexico and Utah.

Natural Gas Production on Federal Lands

Natural gas production on federal lands has declined steadily during the Obama Administration years, down 36 percent in FY 2014 from FY 2008. The once-larger federal offshore volumes of natural gas declined every year through FY 2014, down 57 percent from FY 2008. That decrease was partially offset by the larger onshore volumes, which decreased by only 19 percent over the same time period. This declining natural gas production from federal lands, coupled with increasing total U.S. natural gas production, steadily reduced the federal lands share of total U.S. natural gas production from 28 percent in FY 2008 to 14 percent in FY 2014.

Natural gas production on federal lands decreased 7 percent, from 3,835 billion cubic feet in FY 2013 to 3,551 billion cubic feet in FY 2014. Natural gas produced offshore in federal waters declined by 11 percent and onshore volumes declined by 6 percent. Natural gas production on federal lands dropped to 14 percent of the U.S. total in FY 2014 from 16 percent in FY 2013. The largest portion of the drop in natural gas production on federal lands was in the Gulf of Mexico and in Wyoming

Natural gas production on Indian lands declined between FY 2008 and FY 2014 by 11 percent.

Coal Production on Federal Lands

Coal production on federal lands declined 17 percent between FY 2008 and FY 2014, while coal production on Indian lands declined 27 percent over the same period. U.S. total coal production was 1,172 million short tons in 2008—its peak production–and declined to 999 million short tons in 2014 (a 15 percent decline). Between FY 2013 and FY 2014, coal production on federal lands was essentially unchanged at 401/402 million short tons and remained at 19 million short tons on Indian lands. Coal produced on federal lands accounted for 41 percent of the U.S. total in FY 2014.

Conclusion

Coal and natural gas production on federal lands have been in decline during the entire Obama Administration; only oil production has shown a bit of an upturn, but has not returned to its peak in FY 2010. The Bureau of Land Management’s testimony takes credit for an increase in onshore oil production on federal and Indian lands between FY 2008 and FY 2014, but the agency does not tell you that its share of total oil production has dropped dramatically due to substantial increases in oil production on private and state lands that are not subject to the onerous regulations and permitting delays of the federal government. States approve permitting requests in days or weeks, while the federal government (the Bureau of Land Management) takes the better part of a year. The American public needs to be aware that the federal government’s regulations hinder production and result in higher energy costs for consumers.


[i] Testimony of Testimony of Neil Kornze, Director, Bureau of Land Management, U.S. Department of the Interior before the House Natural Resources Committee Subcommittee on Federal Lands, July 15, 2015, http://www.blm.gov/style/medialib/blm/wo/Communications_
Directorate/2015_congressional.Par.42982.File.dat/BLM%20HF%20
Hearing%20FINAL%207.15.15.pdf
.

[ii] Energy Information Administration, Sales of Fossil Fuels Produced from Federal and Indian Lands, FY 2003 and FY 2014, July 2015, http://www.eia.gov/analysis/requests/federallands/pdf/eia-federallandsales.pdf

[iii] Calculate using the above EIA report and EIA petroleum data.

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