|
|
Federal Oil and Gas Leasing
Acreage Leased but Not Producing Must
Always Exceed Production
to Provide Energy Supplies
First, it is important to understand that production
from a lease may not be readily apparent, but may be occurring
nonetheless.
-
Often natural gas and oil reservoirs underlie more
than one lease, and these leases may be put into legal
"units" to allow common production. The result
may be that production occurs, or is planned, from one
or only a few locations, but not from a surface facility
on every lease.
-
With today's improved technology such as directional
and extended reach drilling, it is possible to have
leases with "no surface occupancy" permit
conditions or operational situations that require production
of the natural gas or oil from nearby leases or locations.
Second, having more acreage under lease than is producing
is not just normal - it is necessary. The most efficient
natural gas and oil exploration and production industry
in the world -- that in the U. S. -- depends on a large
continuing inventory of acreage under lease on which it
can explore, develop and produce energy supplies.
-
The most promising and under-explored onshore areas
for these activities, especially those necessary to
provide natural gas, are on non-park, non-wilderness
federal government lands in the West that should be
leased in the future for oil and gas exploration, or
are already leased.
-
Leased but not producing acreage is normal and necessary
for many reasons, including:
-
Until drilling occurs, there is no way to fully
understand the exact location or extent of subsurface
natural gas or oil deposits in an area of interest,
so ample acreage to include reasonable possibilities
is sought.
-
Seismic surveys and geoscience interpretation
(to, in effect, begin to "see" by computer
imaging and begin to understand what the underground
geology looks like) is usually necessary. Agency
(primarily Bureau of Land Management and Forest
Service) consideration of seismic field work applications
as well as the processes themselves can add significant
non-producing time to leased acreage.
-
Before drilling can occur on leased acreage,
all environmental, cultural and historic preservation
surveys and studies must be completed. This can
add years of non-producing time for leased acreage.
-
Agency consideration of applications for permits
to drill filed after the geoscience and environment-related
work has been undertaken can add many months of
non-producing time on leased acreage.
-
Drilling a single well on leased acreage can
take days to many months or a year or more depending
on geology, depth and seasonal environmental restrictions,
adding more non-producing time on leased acreage.
-
Once an initial well is drilled, time is often
needed to assess its results and to make decisions
as to whether or where additional wells should be
attempted. This adds more non-producing time on
leased acreage - and (especially a "dry hole")
may result in a decision that gas or oil is either
not present or is not present in sufficient quantities
to develop, adding to non-producing leased acreage.
-
If a development decision is made, additional
environmental work and applications for permits
to drill wells and for surface facilities will require
more preparation and agency consideration time,
adding more non-producing time for leased acreage.
-
If a development decision is made, time is required
to build gathering, compression or other facilities
needed to handle the production, adding more non-producing
time for leased acreage.
-
As development occurs, production begins over
time from parts of the acreage that may have been
leased many years earlier only as the steps in the
exploration and production process proceed. Since
production does not begin all at once on any area
of leased acreage, there will naturally be non-producing
areas for months or years
-
If development does not occur, or a decision
has been made to "abandon" the non-producing
acreage, that only means that it can be offered
for lease again in the future. During the non-producing
time for the leased acreage, technology may have
improved or someone may have come up with a new
idea as to how to explore or cut development costs
in the area - and the process can start over again.
Conclusion
No one should be surprised that exploration and production
companies have significant inventories of leased acreage
that do not have oil or gas production - or that do not
have production yet.
Continuing leased acreage inventories are normal and
necessary for an efficient natural gas and oil exploration
and production program.
Making more acreage available in promising areas while
improving environmental and permit consideration processes
can help ensure that non-producing time on leased acreage
is minimized, but that it also holds the greatest potential
to contribute to more energy supply.
|
|
