FRONT PAGE CONTRIBUTOR
White House Falsely Takes Credit For Oil Production Increase
The White House Blog, in a post entitled “Expanding Safe and Responsible Energy Production”, lays out the case for the Obama Administration as a long-time supporter of domestic oil and gas:
One area where we have focused our efforts since the start of the administration – long before this current spike – is increasing responsible domestic energy production – including oil and gas. In fact, oil production last year rose to its highest level since 2003. From 2008 to 2010, oil production from the Outer Continental Shelf increased more than a third – from 446 million barrels in 2008 to an more than 600 million barrels of estimated production in 2010.
Have these people no shame? (Note: Rhetorical question.)
“One area where we have focused our efforts since the start of the administration – long before this current spike – is increasing responsible domestic energy production – including oil and gas.”
Oh, my gosh. I have been paying attention, guys. It was very clear from day one that the Adminstration’s focus was on renewables, not oil and gas. The political appointees in the Minerals Management Service, from erstwhile Director Liz Birnbaum down, had no previous oil and gas background. They were environmental lawyers, and their job was to promote the President’s green agenda.
I saw Interior Secretary Salazar speak in New Orleans, early on in 2009. He had just cancelled the Five Year Leasing Plan for the Offshore that his Republican predecessor had only recently approved. That Five Year Plan is still in limbo.
No, two things stick with me from Secretary Salazar’s meeting: he was interested in increasing the Federal Government’s revenue by increasing oil and gas royalties, and he was interested in advancing offshore wind energy.
The President’s first budget proposal in 2009 proposed increasing the tax burden on the domestic oil and gas producer.
“In fact, oil production last year rose to its highest level since 2003. From 2008 to 2010, oil production from the Outer Continental Shelf increased more than a third – from 446 million barrels in 2008 to an more than 600 million barrels of estimated production in 2010.”
It is categorically true that, while the numbers may be factual, Obama Administration policies had nothing whatever to do with the production buildup in late ’09 into early 2010.
That production growth is due almost entirely to a handful of large deepwater fields, notably BP’s Thunder Horse, which came on production during that time frame.
…”First oil” came on June 14, 2008. Since then, Thunder Horse has steadily ramped up its production by bringing on new wells. In March 2009, Thunder Horse produced close to 250,000 barrels per day (40,000 m3/d) oil equivalent in oil and natural gas from seven wells.
So Thunder Horse by itself accounts for almost all of that abrupt ramp-up in oil production.
Does Obama deserve credit?
Thunder Horse sits in 6,200 feet of water. The leases date from 1988 (Reagan) and 1994 (Clinton). The discovery well was drilled in 1999, and the platform was set in 2005, during the George W. Bush Administration.
Due to the Deepwater Moratorium/Permitorium and the shutdown of the Offshore Leasing Program, we have essentially stopped looking for the next Thunder Horse.
Instead, half the available rig fleet sits idle due to a lack of permits. The BOEMRE’s current permitting backlog is comprised of 270 shallow-water and 52 deepwater wells. The Obama Adminstration threatens to reject seven of the outstanding deepwater permits rather than comply with Judge Feldman’s order to approve them or show cause within 30 days.
Production elsewhere in the U.S. has also increased, but no thanks to Obama’s policies. It is industry ingenuity and competitiveness that has led the production growth, in the Bakken Shale of North Dakota, the Eagleford Shale of South Texas and in the Permian Basin of West Texas. This increase is driven by technology (horizontal drilling and hydraulic fracturing) and by product prices. None of these areas are primarily on Federal lands; they have excelled in spite of hostile Federal policies, not because of them.
In any case, the oil and gas industry actually delivers innovation via the free market. The Obama Administration’s promised Hope and Change, by contrast, depends on a central planning model which is a proven failure. Government policies cannot keep up with, much less predict, the quality and the potential impact of the creativity of private capital.
It is especially outrageous that The White House tries to glom the credit for private success.
Cross-posted to VladEnBlog.