AAPL President Sends Open Letter to President Biden
March 21, 2022
On behalf of the over 11,500-member American Association of Professional Landmen (AAPL) and our 38 affiliated local associations across North America, I am writing to you to express our opposition to recent statements by your administration implying domestic oil and gas producers could provide more U.S. energy but for the actions of the industry. This assertion is not only inaccurate but fails to recognize energy policy decisions that have contributed to the precarious position in which we now find ourselves due to the conflict in Ukraine.
Although we wholeheartedly applaud the Administration’s decision to ban imports of Russian produced oil, the cumulative impact of the Administration’s other decisions, such as: canceling the Keystone XL pipeline permit; suspending or rescinding previously granted drilling leases; stalling approvals for LNG export facilities; and failing to hold a single federal onshore oil and gas lease sale since taking office, have had the chilling effect of disincentivizing decisions to make current and future investments in safe, dependable, and affordable American oil and gas supply. Less than two years ago, the United States achieved energy independence, but that is no longer the case, and we now find our government calling upon adversarial nations like Venezuela, Iran and Saudi Arabia to produce more energy for Americans when we could do it at home — safer, more efficiently and with less risk to the environment and to national security.
Unfortunately, such energy supply deficiencies were predicted as early as January 2021. According to the bipartisan Center for Strategic & International Studies (CSIS) statement on the President’s inaugural day moratorium on federal oil and gas leasing, “[w]ith nearly 25 percent of U.S. oil and gas production coming from federal lands, the policy shift may have significant implications for future investment and production.”1
And just last week, President Biden’s press secretary, Jen Psaki, made a questionable claim when asked by a reporter why the administration is not doing more to tap into domestic energy supply, including restarting lease sales on federal lands. Psaki responded that the United States is already producing oil “at record numbers” and said, “there are 9,000 approved drilling permits that are not being used.” She continued that, “the suggestion that we are not allowing companies to drill is inaccurate. I would suggest you ask the oil companies why they’re not using those if there’s a desire to drill more.”2 Strangely, Psaki refers to drilling “Permits” rather than “Leases.” Oil companies may own a lease on federal land but must subsequently obtain a permit to drill. This process to obtain a drilling permit can take months or even years to acquire.
Although Psaki’s statements may have been intended to reference the pace at which new permits to drill are being issued, her statements are not only misleading but show a lack of understanding of how domestic oil and gas exploration and production functions. “That accusation is a complete red herring,” said American Exploration & Production Council CEO Anne Bradbury. “It's really a distraction from the fact that this administration has paused leasing on federal lands, something that we’re concerned about and something that we think needs to continue right away. The fact is that industry is producing at a higher level on existing leases on federal lands than in the last 20 years and these leases take many years to explore, to develop and produce on,” Bradbury added. This sentiment has been echoed by the American Petroleum Institute as well as other energy trade groups. “This represents a fundamental misunderstanding as to how this process works,” API president and CEO Mike Sommers said of Psaki’s comments. “Once you lease land there is a whole process that you have to go through. First you have to actually discover whether actually there is oil and gas in that land. Second of all, you have to get a permit to actually develop that land.” Sommers added, “Right now we actually are developing more leases than we have in two decades so the White House certainly doesn’t have their facts straight on this.” Energy Workforce and Technology Council CEO Leslie Beyer similarly said, “some permits are viable and some are not,” as a reason for why many are sitting unused. The federal leasing moratorium also isn’t helpful in the current energy environment, she said.3
As to why companies are not using the 9,000 approved oil drilling leases, API’s Vice President of Upstream Policy, Kevin O’Scannlain, explains in The Red Herring of Unused Leases report:
Oil companies have financial incentive to produce oil on leased federal lands, because they have to pay “rent” and are at risk of losing their leases until they begin producing. The law already requires companies to either produce oil and/or gas on leases or return the leases to the government — the so-called “use it or lose it” provision — generally in the first 10 years. When a company acquires a lease, it makes a significant financial investment at the beginning of the lease in the form of a non-refundable bonus bid and pays additional rent until and unless it begins producing. What’s more, it can even be illegal to simply sit on excess federal land leases. For federal onshore, the Mineral Leasing Act prevents any one company from locking up unproductive excessive federal acreage. Plus, it’s not as quick and easy as merely flipping a switch since it takes years of work to determine whether the leased land even holds enough oil to be commercially viable. Then, there’s the long process of overcoming “administrative and legal challenges at every step along the way.” The lengthy process to develop them from a lease often is extended by administrative and legal challenges at every step along the way. The argument about “unused” leases is a red herring, a smokescreen for energy policies that have had a hamstringing effect on oil production. Ultimately, energy policies affect the energy investment climate. Government policies can either discourage or encourage oil producers to take the risk of investing billions of dollars, plus considerable time and effort, to find out whether or not the lands they lease are viable sources of oil. Psaki has made the claim about “unused” federal leases before. It has become a line the White House pivots to when pressed to explain why it isn’t doing more to support American oil and gas production.”4
The Wall Street Journal’s editorial board has made similar arguments noting that, “regulatory uncertainty and political hostility to fossil fuels discourage long-term investments.” The editorial board explained that “President Biden’s anti-domestic energy policies have made his the first administration in at least twenty years to go an entire year without selling a single onshore lease. The Biden Administration isn’t just refusing to grant additional leases — it has actually revoked a permit that could bring 830,000 barrels of crude oil daily to the U.S.5 In a controversial move during his first day in office, President Biden revoked the permit allowing extension of the Keystone XL pipeline to Alberta, Canada. If completed, the pipeline could potentially provide the U.S. with more oil than it currently buys from Russia.”6 Moreover, according to a Department of Interior report, the U.S. had more than 37,000 oil and gas leases just last year — so 9,000 is a small number comparatively — and just because an oil company has a lease doesn’t mean they can just start drilling.7 They must organize and safely manage their reservoir and satisfy several regulatory requirements, such as an onsite inspection, environmental review and permit approval. This process can actually take up to 10 years. Experts say even if these companies start drilling more oil wells today, it could take anywhere from six months to years for that oil to start flowing.8
AAPL’s advocacy to increase domestic energy supply — whether on federal leases or otherwise – is a mainstream position supported by a majority of Americans. In a recent Morning Consult poll released March 1, 2022, “90 percent of American voters support the U.S. developing its own domestic energy resources rather than relying on foreign energy sources.” Moreover, “85 percent believe producing natural gas and oil here in the U.S. helps America maintain a leadership role during a period of global uncertainty” and “84 percent agree that producing natural gas and oil here in the U.S. helps make our country and allies more secure against actions by other countries such as Russia.”9
Above all, AAPL and its members, along with the remainder of the oil and gas industry, stand ready to provide safe, affordable, environmentally sound and abundant domestic energy production for the American people. We are committed to working with the Biden administration to promote sound energy policies that can immediately begin to offer stability and confidence in making investment decisions while alleviating the current supply issues and restoring America’s energy independence.
Respectfully,
James T. Devlin, CPL
President
American Association of Professional Landmen
cc:
The Hon. Jennifer Granholm
Secretary
U.S. Department of Energy
1000 Independence Ave., SW
Washington, DC 20585
The Hon. Debra Haaland
Secretary
U.S. Department of the Interior
1849 C Street, NW
Washington, DC 20240
The Hon. Tracy Stone-Manning
Director
Bureau of Land Management
U.S. Department of the Interior
1849 C Street NW
Washington, DC 20240
1 Ben Cahill, Biden Makes Sweeping Changes to Oil and Gas Policy (CSIS, January 28, 2021); https://www.csis.org/analysis/biden-makes-sweeping-changes-oil-and-gas-policy
2 Tyler Olson, Energy industry swipes back at Psaki 'red herring' comment on oil and gas leases (Fox Business Network, March 8, 2022); https://www.foxbusiness.com/politics/energy-industry-psaki-oil-and-gas-leases-ceraweek
3 Id.
4 Craig Bannister, API Explains How Psaki’s ‘9,000 Unused, Approved Drilling Permits’ Is ‘Red Herring’ to Distract from WH Policies (CNSNews, March 8, 2022); https://www.cnsnews.com/blog/craig-bannister/api-explains-how-psakis-9000-unused-approved-drilling-permits-red-herring
5 Biden’s Fossil-Fuel Blockade (Wall Street Journal Editorial Board, March 4, 2022); https://www.wsj.com/articles/joe-bidens-fossil-fuel-blockade-onshore-drilling-leases-oil-gas-russia-11646409502
6 Janae Bowens and Konner McIntire, Fact Check Team: Why isn't the US producing more oil? (ABC News, March 4, 2022); https://katv.com/news/nation-world/fact-check-team-why-isnt-the-us-producing-more-oil
7 Id.
8 Id.
9 9 in 10 U.S. Voters Support American Energy Production Over Reliance on Foreign Energy: New API Poll (API, March 1, 2022); https://www.api.org/news-policy-and-issues/news/2022/03/01/new-api-poll-highlights-support-for-american-energy