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68 Million Acres?

Barack Obama said during last night's debate that oil and gas companies are sitting on 68 million acres of leased land that is currently not producing. If companies don't start drilling, he said, they should lose their leases -- "use it or lose it." 

It's a line congressional Democrats have used fequently and one that drives the GOP nuts. Shortly before the debate, House Republican staff on the Natural Resources Committee put out an exhaustive study looking into the the claim. Their conclusion: There is already a law on the books that terminates non-producing leases. And if an area of land isn't producing, the reason may not be industry foot-dragging, but the simple fact that there may be no oil or gas under that particular ground.

All non-producing oil and gas leases are in some stage of exploration and development. If a lease is not producing or does not contain commercial quantities of oil or gas at the end of the initial term of a lease, the lease expires.

The Bureau of Land Management (BLM) or MMS can include the expired lease area in subsequent lease sales; often an area will be leased several times before a deposit is found or the technology is developed to recover a known resourc making the lease commercially viable.

Additionally, there is no guarantee that a Federal oil and gas lease contains either oil or gas. The company awarded the lease has to evaluate the area first. It must conduct seismic and other surveys to assess the potential for oil and gas being present in the lease and then drill to determine if there is actually any oil or gas within the lease area. All of this takes time, requires compliance with environmental laws and regulations and step-by-step approval from the BLM to drill an exploration well or the development and production wells needed to bring a field into production. Often at the end of the day there is no oil or gas found. For example between 2002 and 2007 47% of all the exploration wells and 8% of the development wells drilled were dry!