Report: Drilling in Federal Waters, Public Lands Could Be Faster

WASHINGTON – The government isn't doing enough to expedite drilling in federal waters and on public lands, according to a report issued Tuesday by congressional investigators.

In a review of the 55,000 federal oil and gas leases issued to energy companies by the Interior Department from 1987 to 1996, the General Accountability Office found that the vast majority expired without being drilled, and an even smaller amount actually produced oil and natural gas.

"We do not agree that Interior is pursuing expedited development of oil and gas leases," the report reads.

Energy companies currently hold leases but are not producing on about 68 million acres of federal land — property that has the potential to double domestic oil production. About a third of the oil produced in the U.S. in 2007 came from public lands.

House Democrats and Democratic President-elect Barack Obama have said companies should "use it or lose it" — meaning they must drill on lands they currently rent or release them before being awarded new leases.

House Natural Resources Chairman Nick Rahall, D-W.Va., who sponsored "use it or lose it" legislation earlier this year said the report validated his "long-held belief that oil and gas companies can, and should, be doing more to develop those leases."

The GAO found that current practices to expedite drilling, such as increasing the rent on federal lands not being drilled, did not do enough to spur production. Only about 26 percent of offshore leases and 6 percent of federal leases on land issued from 1987 to 1996 had been drilled by 2007. The percentage that produced oil and gas was even smaller — 12 percent offshore and 5 percent on land.

The report recommends that the department consider measures used by states and private landowners to jump-start drilling, such as offering a lower royalty rate for faster production and shortening the term of the lease.

In a letter in response, Assistant Secretary Stephen Allred said that environmental reviews delay development on federal lands. He also said that fast-tracking production could drive companies to develop oil and gas resources outside the U.S. and decrease revenues collected by the federal government.