In a study released last week, Dr. Joseph Mason of LSU demonstrated the vast economic benefits of opening up federal lands to oil and gas development: 500,000 new jobs a year and more than $30 billion a year in federal, state, and local tax revenue over the next seven years alone. That’s just for starters. The study also shows that opening new federal lands to oil and gas production will create a cumulative $14.4 trillion in economic activity. But instead of seizing the opportunity to unlock the benefits of expanding oil and natural gas exploration, the Interior Department on Feb. 6 identified 23 renewable energy projects for priority permitting.
If all 14 wind, 6 solar, and 3 geothermal projects are approved and built, the Bureau of Land Management (BLM) estimates the completed projects would total 5,300 megawatts of electricity generating capacity. That’s enough energy to power 1.6 million homes when the wind is blowing hard enough, the sun is shining, and the geothermal plant is operating at full capacity.
While 5,300 megawatts of electricity is a lot, how does that compare to the energy produced from oil and gas production? In the table below, we calculate the total British thermal units (Btu) these projects would produce if their capacity factors equal EIA’s estimates in its Annual Energy Outlook.[i]
As the table below indicates, BLM’s priority projects would be capable of producing about 44 trillion Btu of energy annually. To put that in perspective, oil wells in North Dakota produced more than 127 trillion Btu in Nov. 2012 alone.[ii] That’s almost three times more energy in one month than BLM expects all of its priority wind, solar, and geothermal projects to produce in an entire year. Not only that, but in the last 14 months for which there is data, North Dakota’s energy production, increased by 46 trillion Btus a month.[iii] In other words, the increase in North Dakota’s monthly production over the last fourteen months was greater than what the Department of Interior’s pet projects will produce over the course on an entire year. Plus, unlike solar or wind, oil can be used when and where it is needed.
BLM’s Priority Renewable Energy Projects on Federal Land
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As another example, IER calculated the energy production potential of the Manteo Prospect, a potential natural gas project off the shore of North Carolina. IER estimated the natural gas project could generate 320 trillion Btu of energy per year—more than 7 times as much energy per year as the Department of Interior’s expedited renewable projects.
But prospects like Manteo continue to be stopped by the federal government. For example, the federal government controls vast swaths of land and water which could be used for more exploration, but the Interior Department has leased just 2 percent of federal offshore areas and less than 6 percent of federal onshore lands for oil and gas development. Since the 2010 drilling moratorium, the Obama administration has pursued a policy of slow-walking offshore drilling permits. Onshore leasing is treated in a similar fashion, with leases falling to approximately 50% of those issued by the Bush administration, which leased fewer lands than the Clinton Administration before it. While production of energy from such lands lags far behind those on private and state lands, delays, red tape and uncertainty has grown exponentially. For example, it takes 307 days for the federal government to process a permit to drill on its lands, but only 10 days for North Dakota and 27 days Colorado to process a similar permit. The government process makes no attempt to be user friendly for those willing to pay money to explore for energy, hire employees and make investments here in the U.S.
As Dr. Mason pointed out, opening federal lands to oil and gas development would result in enormous economic benefits, yet Interior obviously thinks renewable energy projects are more deserving of streamlined permitting. In the face of basic math, Interior continues to lease a pittance of federal land for oil and gas production, while prioritizing renewable energy projects with more limited potential.
[i] Energy Information Administration, Levelized Cost of New Generation Resources in the Annual Energy Outlook 2012, June 25, 2012, http://www.eia.gov/forecasts/aeo/electricity_generation.cfm.
[ii] According to the Energy Information Administration, 1 barrel of crude oil converts to 5.8 million Btu based on U.S. production in 2011. http://www.eia.gov/kids/energy.cfm?page=about_energy_conversion_calculator-basics
[iii] For historical oil production statistics in North Dakota, see https://www.dmr.nd.gov/oilgas/stats/historicaloilprodstats.pdf