Utah Officials Decry Obama Administration’s Oil Production Restrictions

Utah Officials Decry Obama Administration’s Oil Production Restrictions
June 12, 2012

Cheryl K. Chumley

Cheryl K. Chumley (ckchumley@gmail.com) writes from Northern Virginia. (read full bio)

State government officials in Utah are calling on the Obama administration to reverse its policy of curtailing oil and natural gas production on federal lands in western states. Utah officials say Obama’s policies are killing jobs and stifling the state’s economy.

75 Percent Cut in Leases

The Obama administration has reduced by 75 percent the amount of federal land available for oil leases in Colorado, Utah, and Wyoming. As a result, 2 million acres of land, with the potential to produce up to 2 trillion barrels of oil, are now off limits for oil production. 

What’s left for lease is only 461,000 acres, split among the three states. Wyoming’s allotment is 174,476 acres and Colorado’s, 35,308 acres—down from 360,000. Utah, meanwhile, is allotted 91,045 acres for oil sands development and 252,181 for overall oil development.

A spokeswoman for the Utah Governor’s Office of Public Lands said the new lease levels are an “unfortunate setback” in the state’s efforts to develop new energy sources.

“The proposal will unnecessarily delay the full commercialization of this vast energy resource and will make it that much harder to meet Utah’s, and the nation’s, future demands for energy,” said Allyson Isom, spokeswoman for Utah Public Lands Director Kathleen Clarke.

Developers Awaiting Permission

The reduction in oil production will cause substantial economic pain in the state.

Utah’s Office of Energy Development (OED) reports the new limits on leasing could cost the state $3.26 billion in investment income. According to OED, Enefit American Oil Company has spent $100 million bringing its technology to Utah, and promises to expand if more federal lands are available for oil production. Questerre Energy Corporation signed a letter of intent to invest $40 million if federal lands are made available. French oil giant Total entered into a $200 million joint venture with Red Leaf Resources with the intent to produce oil from shale on federal lands.

Searching for Logic

The Obama administration’s plan makes no sense, said Cody Stewart, energy adviser for Utah Gov. Gary Herbert.

“We’re going to artificially restrict access at the same time we have companies that are going to invest millions of dollars,” he said. “I’ve not heard from any company yet that they’re pulling out, but I have heard from some that this is going to make things a lot harder for them. It’s not helpful at all.”

Not all of the federal lands made available for leasing are conducive to oil production, Stewart added. “When you artificially constrain the size of the lease, there’s geology involved. Not all [the land made available for lease] is prime. There could be a mountain there,” he said.

Awaiting Fall Election

Many companies have decided to hold off on investment decisions until they see who prevails in the November elections. 

“It’s still at the early stage,” Stewart said. “It is really unfortunate. It seems like this administration doesn’t explicitly come out and say they’re hostile to oil shale, but if you look at their actions, it shows otherwise.”

Cheryl Chumley, ckchumley@aol.com, writes from northern Virginia.

Cheryl K. Chumley

Cheryl K. Chumley (ckchumley@gmail.com) writes from Northern Virginia. (read full bio)