Impact of Making the Onshore Oil and Gas Leasing System More Competitive

Legislation has been introduced in the Senate by the administration to expand competitive leasing of Federal onshore oil and gas resources.

While the bill, S. 1637, has several commendable features, it is nonetheless based on insufficient data and analyses and poses such great uncertainties that it should not be enacted in its present form. While S. 1637 does have features directed at improving diligence, its main thrust appears to be the assurance of maximum front-end revenues to the Government at a time when efforts to stimulate increased production of oil and gas from domestic resources and from public lands would seem of high priority. While the bill's impact on production is difficult to forecast because of its vagueness, uncertain areas, and the latitude granted the Department of the Interior, it appears likely that it would lead to considerably less land under lease, delays in making land available for leasing, and less incentive and opportunity for independent oil companies and others to continue their role of searching for and exploring land for prospective oil and gas. New lands actually having the most potential for new discovery may lie outside the so-called producing geological provinces and would not be leased competitively. Caution should be exercised before making any sweeping changes to the present system. Although it contains flaws and inequities, it has basically succeeded in making an important contribution to domestic oil and gas production by making land available and continually accessible for exploration and development. In addition, there should be a clear understanding and agreement both in the administration and in Congress on the objectives sought and likely impacts to result.