Monday, March 28, 2011

Obama to Energy Producers: Use It or Lose It

The arguments for and against renewal of our offshore oil and gas drilling have returned in Washington, D.C. Americans are not pleased with the increasing cost of energy and the Obama drilling moratorium is directly responsible for much of our woes. To counter increased pressure to accelerate the permit issuing process, the administration hopes to simply levy a new tax on leases not currently being used on public lands. It is the "use it or lose it" approach to energy production, which is not a solution at all, only an excuse for Democrats to raise taxes on an industry already the most taxed in the country.

Democrats in Congress are also hoping to put pressure on companies to tap unused oil and gas leases on public lands. The Democrats argue that companies should tap their unused leases before drilling in new territory. They’ve floated proposals that would impose a fee on non-producing leases and require companies to show they're planning to develop their tracts. President Obama has said he supports such a proposal. In fact, his fiscal year 2012 budget request calls for "establishing fees for new non-producing oil-and-gas leases (both onshore and offshore) to encourage more timely production." Obama, at a March 11 press conference on rising gas prices, called on the Interior Department to report back about the number of unused leases on public lands. The review is expected to be delivered to the White House in the coming days.

Speaker Boehner reacted to the implied threat of increased taxation: “We won’t reduce our dependence on foreign oil if politicians in Washington remain dependent on hollow talking points like ‘use it or lose it,'" House Speaker John Boehner (R-Ohio) said in a statement this week. “Americans are looking for real solutions and a sustained commitment to expanding American energy production that will lower gas prices and create more jobs, which is what our American Energy Initiative is all about.”

The key to making progress is in the issuing of new drilling/exploration permits and not simply issuing permits on wells already in place. New exploration is vital for future production - it is a lengthy process and is now already a year behind what could have been, had the moratorium not been issued just under a year ago. Chevron has been issued the very first permit in just shy of a year to explore a new reservoir.

Under a permit issued by the Bureau of Ocean Energy Management, Regulation and Enforcement, Chevron will be allowed to drill a new well in a previously untapped reservoir in the Gulf of Mexico. Although it is the fifth deep-water drilling project to be permitted since the Obama administration lifted a ban on that work last October, Chevron’s well would be the first in an unknown reservoir where oil or gas has not been produced. The other permits — all issued in the past four weeks — have gone to projects where wells have already been drilled and discoveries have been made.

The Drill Here, Drill Now initiative has been re-launched. Watch HERE.

Will energy production and exploration be a campaign issue in 2012 for President Obama? You betcha.

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