There are some units of the National Park System that allow oil and gas drilling, but very few. And that's wrong, believes a congressman from Texas.
Republican Rep. Pete Olson said there are energy reserves scattered across the country that can't be tapped because they lie within the National Park System.
"Guys on the West Coast ... west of the Mississippi, they know they've got oil and gas under the land that they can't touch because it's on a national park or some sort of federal land," he told Platts, a media outlet that covers the energy sector.
Energy development already exists at places such as Alibates Flint Quarries National Monument, Aztec Ruins National Monument, Big Cypress National Preserve, Big Thicket National Preserve, Big South Fork National River and Recreation Area, Cuyahoga Valley National Park, Fort Union Trading Post National Historic Site, Gauley River National Recreation Area, Lake Meredith National Recreation Area, New River Gorge National River, Obed Wild and Scenic River, Padre Island National Seashore, and Tallgrass Prairie National Preserve.
Rep. Olson, who made his comments while attending the Texas Independent Producers and Royalty Owners annual convention, believes companies can safely develop oil and gas resources on National Park System landscapes.
"Working with the parks system, without destroying the parks' value, we can do both. We've proven that we can do that here in Texas," he said.
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As a followup, why do companies want to lease public vs. private land—even if they don't expect to actually drill soon? Lease values vary widely based on current and estimated activity, but costs for leases on public land can be a bargain. In the past three years, the average price for a BLM lease in Montana and the Dakotas was $210 per acre.
State-owned land can also be a bargain. In one area in Michigan in 2012, a "signing bonus of $35 to $200 per acre was common for private land, but the average paid to lease state-owned land in that area at that time ranged from $17 to $54 per acre. One article cites private land lease payments in a "hot" area of PA of $7,000 per acre; they've been known to get into six-figures for a 100-acre tract.
BLM leases on federal land "are valid for 10 years or as long as there is at least one producing well," so a single well can extend a lease on thousands of acres of public land for many years. It's a great hedge for producers, who can reasonably expect to see higher prices for oil in the future...and in the meantime, they can deduct the lease payments as expenses. By contrast, quick research indicates leases on private land, which are almost always much smaller parcels, often run for 3 to 5 years.
An even bigger incentive for production from public lands is the royalty paid on production. On federal land, the royalty is 12.5 percent—and it's shared with the state where the well is located. Most private landowners are understandably reluctant to discuss what they earn from leases and from royalties, but a study cited here estimates the average royalty paid in PA for natural gas is 18.75%, and runs as high as 20%.
No wonder the industry loves the long-term leases on public land. If they can cut their royalty expenses by 6 to 8% as compared to private land, we're talking about some serious money. And, it get's even better for the companies. Congress even cut royalties for some offshore wells (on public land) to zero for wells drilled between 1996 and 2000. One estimate is a loss to the taxpayers of $26 billion in royalties on those wells, and that's just through the next 10 years. Another estimate places the total cost to taxpayers at up to $53 billion in the next 25 years. Do we "subsidize" big oil? There's one answer, and try to get that kind of deal from a private landowner.
The feds need to have more flexibility on negotiations for royalty income from public land, but of course that's a decision subject to congressional control... and we know they always base their decisions strictly on the public interest.
Speaking of gullible . . . . and unable to THINK beyond a myopic agenda.
No need in "national interests"? Its not in our national interest to have a LONG TERM secure source of energy? In not in our national interest to create thousands of jobs? Its not in our national interest to improve our balance of trade? Its not in our national interest to lower the worldwide cost of oil? Its not in our national interest to have countries reliant on us rather than the other way around?
What exactly do you call "in our national interest"? Ceding our sovereinty to the UN?
Jim,
It may very well be the case that we need to review what we charge for royalties on public lands. But, if you had any understanding in economics you would recognize that the end result would not be lower oil company profits but rather higher energy prices. If anyone is getting a subsidy, it is the end users not the producers.
Our national interest does not lie is some sort of conspiracy laced paranoid fantasy ala LaVerkin Utah. Our national interest lies in carefully considering, realistically and clearly, what is best for our nation, for its future, for all of us and not just the big money interests.
Unfortunately, that entire concept escapes many whose gullible myopia distorts reality for them.
Conspiracy laced paranoid fantasy? Energy security, jobs, balance of trade, national security is a "conspiracy laced paranoid fantasy?
But of course, your revert to your insults ("whose gullible myopia distorts reality") when you can't legitimately participate in the discussion.
Guess you're right, Lee. Pandering to the most rabid supporters. Even to the degree of invoking black helicopters from the UN.
Energy security, jobs, balance of trade, national security become paranoid fantasies any time they are coupled with "ceding our soverienty (sic) to the U.N."
You just proved the legitimacy of my comments.
Watch out for those guys wearing blue helmets, though. They're everywhere!
Oh, sorry. It was just spring football practice at BYU.