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Sad But True: WSJ Editorial Saying Obama Administration Doesn’t Drill Enough Is Wrong

Today, the Wall Street Journal editorial board published a gem of an editorial titled “Drill, Barack, Drill.” You might be able to guess what it’s about from the title.

It takes a report from the Congressional Research Service about drilling on public lands, engages in some flagrant cherry picking, shoots out some outright falsehoods, and concludes that the Obama Administration has been standing in the way of fossil fuel development on federal lands.

The truth, while sobering, is very different from the creative accounting performed by the Wall Street Journal ed board. Here’s the reality.

WSJ Says: “All of the increased [oil] production from 2007 from 2012 took place on non-federal lands.”

That’s one cherry to pick. There’s a whole tree though. Looking at the whole CRS report gives you the full story:

When comparing fiscal year 2010 with 2007, growth in the federal share of production was about 82 percent of the total.

That’s a lot of growth in production not on private and state lands. The report also says that crude oil production will continue to be significant, and “could remain consistently higher than previous decades.”

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WSJ Says: “Federal share of total U.S. oil production has slid under Mr. Obama to 26% in fiscal year 2012 from 31% in fiscal 2008.”

In fact, oil production from federally owned places was higher in every one of the past four years compared to 2008, when oil hit a record high price of $142.50 per barrel. In fiscal year 2008, total crude oil production was 1,550 thousand barrels per day. The rate of production for the next four years has been: 1,731, 1,989, 1,715, and 1,627 thousand barrels per day. The Wall Street Journal may be trying hard here, but none of those numbers is smaller than 1,550.

The domestic boom is driven by ample tight oil (shale oil) and shale gas resources on private lands. In 2012, Adam Sieminski, the Administrator of the Energy Information Administration testified before the House Energy and Commerce Committee that:

Because the shale resource basins are largely outside of the Federal lands, so too is shale production. In this case, the geology is working in favor of non-Federal landowners.

The rapid increase in natural gas production from shale resources, found largely outside the Federal lands, over the last 5 years has significantly reduced natural gas prices and the relative attractiveness of conventional natural gas resources, including those of Federal and Indian lands. (EIA)

Also, most oil and gas shale plays in the contiguous U.S. are on private lands:

WSJ Says: “The sharp drop in production on federal lands is a direct result of Obama Administration policies. They include a drilling moratorium imposed after the 2012 Deepwater Horizon Spill…”

The CRS report helpfully points out that “offshore, most of the 1.7 billion acres of federal water are no longer under leasing and development moratoria.” Since the new standards were put into place, the Obama administration has approved over 600 permits for activities at hundreds of wells in the Gulf of Mexico. Drilling is nearly up to pre-Deepwater Horizon levels.

Specifically, per the Energy Information Administration Short Term Energy Outlook released last month:

During 2012, oil production in the Federal GOM [Gulf of Mexico] is projected to have increased from about 1.31 million bbl/d [barrels per day] in January to about 1.39 million bbl/d in December (up 6 percent). … EIA expects Federal GOM production to increase from an average 1.27 million bbl/d in 2012 to an average 1.39 million bbl/d in 2013.

WSJ Says: “Average time to process a federal application for a drilling permit increased 41% from 2006 to 2011 — to 301 days”

Again, the CRS report contains information that the Journal must have missed:

In 2006 it took the BLM [Bureau of Land Management] an average of 127 days to process an APD [application for drill permit], while in 2011 it took BLM 71 days. In 2006, the industry took an average of 91 days to complete an APD, but in 2011, industry took 236 days.

The delay in the permitting process is not the in the federal government’s court, but rather the oil and gas industry. The BLM is almost twice as quick in processing permits as it was in 2006.

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The report also helpfully puts in context the claim that private lands permitting takes less time than public lands permitting:

“Some critics of this lengthy timeframe highlight the relatively speedy process for permit processing on private lands. However, crude oil development on federal lands takes place in a wholly different regulatory framework than that of oil development on private lands…. A private versus federal permitting regime does not lend itself to an ‘apples-to-apples’ comparison.”

WSJ Says: “The few leases he has put up for auction contain land that is of little value to drillers”

Since FY 2006, there has been nearly a 67 percent decline in the amount of public land nominated by the industry in the Rocky Mountain States. And remember, the Administration has approved more than 600 permits in the Gulf of Mexico alone.

Last year, a report from Rep. Ed Markey showed that 131 oil and gas companies had 3,684 idle leases in the Gulf of Mexico alone. That means oil companies are not using 72 percent of offshore acres, and 56 percent of total offshore acres. This is 20.7 million acres we’re talking here — not small potatoes.

WSJ Says: “Readers may recall that Mitt Romney raised this issue in the second presidential debate. Mr. Obama responded that “What you’re saying is just not true. It’s not true.” The Congressional Research Service now documents that it is true….”Mitt, it’s still not true. Read the report — all of it.

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It would be great for the climate if federal oil and gas production were slowing as we transition to renewables. The takeaway of this sad state of affairs is that we continue to pursue hydrocarbons to burn, at rates equal to or greater than historical rates.