The Institute for Energy Research is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets.

About IER
Latest Analysis
November 21, 2013

The Impact the Government Shutdown had on the Energy Industry

November 21, 2013
Print Friendly
Facebook

The White House Office of Management and Budget (OMB) recently released a report attempting to highlight the impact of the government shutdown last month on the U.S. energy industry. While the shutdown had been felt, the impact is dwarfed by the administration’s consistent slow walking of permits.

To assess the true impact of the government closure on energy development, the Institute for Energy Research has submitted a FOIA request to the Bureau of Land Management (BLM) to gather data and gain historical context to prove how small the effects of the October shutdown actually were. While IER has yet to receive a response to the FOIA request, it is clear that under this administration, the real slow down is the normal course of business.

BLM Permit to Drill Applications

The first major claim of the OMB report says the shutdown forced the BLM to suspend processing about 200 Applications for Permits to Drill (APD).

A week after the “government shutdown” began, President Obama and Sen. Ed Markey began sounding the alarm and blaming the government shutdown for halting oil and natural gas drilling permits.  As the record shows, theirs were crocodile tears.

President Obama stated that “The Republicans say they’re very concerned about drilling,” adding “Well, one of the things that happens when the government shuts down is new drilling permits aren’t processed.” This is similar to a short document released by Sen. Markey which blames “The GOP government shutdown is going to lead to decreased oil, gas and renewable energy production on public lands and costing taxpayers money.”

Over the past 5 years the Bureau of Land Management only issued 27,400 permits to drill compared to Texas that will award more than 23,000 this year alone. On a per-year basis, that means that the federal government is awarding less than one quarter of the number of permits that the state of Texas alone is awarding. Other states have also taken to embracing the energy industry. While the BLM approved 4,256 drilling permits in 2012, Kansas, Pennsylvania and California approved 6,861, 4,627 and 3,586 respectively.(See Table 1 Below)

If President Obama and Sen. Markey were serious about oil and natural gas development on federal lands, they would look to states like Texas. The Texas oil and gas regulators have reduced permitting times to 5 days per well and are shooting for 3 days. That compares to 228 days for the BLM.[i]  While waiting 16 extra days for a drilling permit may have been inconvenient, the original 228-day wait is much more concerning.

Table 1: Approved Applications for Permit to Drill; 2008-2012

Screen Shot 2013-11-21 at 2.30.52 PM

Sources: http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas/statistics.html

Individual State Resources: Texas: http://www.rrc.state.tx.us/data/drilling/txdrillingstat.pdf,      

Pennsylvania:http://www.depreportingservices.state.pa.us/ReportServer/Pages/ReportViewer.aspx?/Oil_Gas/Permits_Issued_Detail,

Kansas: Intents to Drill by Month/Year 1989 – 2013, document provided by Conservation Division, Kansas Corporation Commission.

California: ftp://ftp.consrv.ca.gov/pub/oil/annual_reports/2012/PR03_PreAnnual_2012.pdf

BLM1Sources: See Table 1

Lease Sales Postponed

The Second energy claim in the OMB report said that in addition to slowing the approval of submitted drilling applications,  “oil and gas lease sales were also postponed.” The report does not clarify that it was only a single lease sale scheduled for October 16th in New Mexico that was put on hold, nor does it say if/when that lease sale will be rescheduled. We do know that the scheduled lease sale for October 22nd was held as planned. It is also important to note that the sale was delayed, not canceled. It will still happen, and the government will still collect that revenue.

What should be highlighted is the decrease in leased land under Obama. In Obama’s first term from 2009-2012 a total of 6.9 million acres were leased. That is less than half of the 15.9 million acres leased under George W. Bush from 2005-2008.

BLM21

Source: BLM Oil and Gas Statistics for Fiscal Years 1988 – 2012

The following chart shows the average number of new leases that the Bureau of Land Management issued during each administration. While the trend is down under all administrations covered, the Obama Administration has managed to achieve the lowest—half that of the Clinton Administration and a third less than the George W. Bush Administration.[ii]

 

BLM2The attempt to frame the shutdown as a major blow to the energy industry is an effort to hide the Administration’s own anti oil and gas record. Adding 16 days to a drilling permit approval that has sat in a queue for over seven months is not newsworthy. Pushing back a lease sale by a month is lamentable, but the real story is that the Obama administration is leasing far less than in the past.

Conclusion

Oil and natural gas production generates tens of millions of dollars a day in tax revenues and more importantly, it generates over a billion dollars in economic activity a day while providing good jobs for many Americans and keeping our economy moving. Stifling production on federal lands only harms Americans. The real government shutdown has come not from this temporary fight in Washington, but policies supported by both Obama and Markey designed to deliberately make oil and gas production and transportation harder onshore and offshore, on federal and private lands, throughout the US and North America.

IER Policy Associate Landon Stevens authored this post


[i] BLM Average Application for Permit to Drill (APD) Approval Timeframes: FY2005 – FY2012 http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas/statistics/apd_chart.html
[ii] https://www.instituteforenergyresearch.org/blog/#_edn7
Print Friendly

View Comments
Back to top