Obama Unveils Energy Plan to Reduce Foreign Oil Reliance

President Obama today announced a new energy plan aimed at reducing the United States' reliance on foreign oil, proposing the development of unused oil leases on federal lands, increasing the use of natural gas, and investing in wind and solar power. The plan builds on a legislative proposal by Senators Bill Nelson and Robert Menendez, which would require companies to detail how they intend to develop federal leases and impose a fee on unused lands.

Obama's plan focuses on utilizing the tens of millions of acres currently under lease that remain idle, as highlighted by Heather Zichal, deputy assistant to the president for energy and climate change. Taxpayers are not receiving the full benefit of America's resource potential, she stated. The oil industry has 38 million acres leased onshore but less than half are producing oil, while offshore, almost 38 million acres are under lease with only 10.5 million acres producing oil.

Nelson and Menendez's legislation, filed on March 16, would impose an annual $4-an-acre fee for unused lands, with an estimated $874 million generated in 10 years. The administration may also adjust lease durations to accelerate development and reward companies with lower royalty rates for increased production.

Key Takeaways:

• The Obama administration plans to develop unused oil leases on federal lands to reduce the reliance on foreign oil.
• Senators Bill Nelson and Robert Menendez's legislative proposal would require companies to detail their intentions for developing federal leases and impose a fee on unused lands.
• The oil industry has 38 million acres leased onshore, but less than half are producing oil, while offshore, almost 38 million acres are under lease with only 10.5 million acres producing oil.
• Heather Zichal, deputy assistant to the president for energy and climate change, highlighted the underutilized oil leases, stating "taxpayers are not getting the full advantage of America's resource potential."
• The planned legislation aims to accelerate energy production and increase the use of natural gas, wind, and solar power.
• The proposal also seeks to increase transparency and accountability from companies regarding their lease development plans.

Statistics:

• 38 million acres of federal lands are leased onshore, but less than half are producing oil.
• 10.5 million acres of almost 38 million acres under lease offshore are producing oil.
• 11.6 billion barrels of crude are thought to be held in undeveloped leases in the Gulf of Mexico, which may meet U.S. demand for nearly two years.
• The U.S. consumes approximately 18.8 million barrels of oil per day, as reported by the Energy Information Administration.
• 59.2 trillion cubic feet of natural gas are believed to be held in undeveloped leases in the Gulf of Mexico, according to the Interior report.

Sources:

• "Unused Oil Leases in Gulf May Meet Two Years of U.S. Demand" by Katarzyna Klimasinska, Bloomberg News, March 29, 2011.
• White House website, statement by Heather Zichal, deputy assistant to the president for energy and climate change.
• Text of Obama's energy speech at Georgetown University.
• Bloomberg article, "Unused Oil Leases in Gulf May Meet Two Years of U.S. Demand."
• News release from the office of Sen. Bill Nelson, D-Fla.