Mike Sommers, the chief executive officer of the API who was in Houston Monday for CERAWeek by S&P Global, said the industry is using a higher percentage of federal onshore and offshore leases than at any time in the past, and it’s continuing to increase production to meet surging demand.
Forced to backpedal after a year of cramming through its “green” agenda which has led to a historic undercapitalization in oil industry spending which in turn is a major culprit behind the current inability to respond to the Russian supply shock (see “Will ESG Trigger Energy Hyperinflation“), the Biden administration has repeatedly pointed to the number of approved but untapped drilling permits on federal land when questioned about how U.S. production can rise, and what the federal government can do to help.
“There’s a fundamental misunderstanding of the administration as to how the process actually works,” Sommers said in an interview on the sidelines of the conference, Bloomberg reports.
“Just because you have a lease doesn’t mean there’s actually oil and gas in that lease, and there has to be a lot of development that occurs between the leasing and then ultimately permitting for that acreage to be productive,” he said. “I think that they’re purposefully misusing the facts here to advantage their position.”
Sommers said the Biden administration should support policies that promote U.S. oil and gas production over OPEC+, which includes Russian oil, a point even Elon Musk has made recently.
Instead of doing just that however, the U.S. is set to ban imports of Russia crude in order to score political points, when all such a move will do is push the price of crude even higher. So what could the US do instead of hollow rhetoric? Well, one suggestion that has been floated is to announce that the US is immediately lifting all moratoriums on drilling in federal lands, establish a tax credit for hydraulic fracking, and ask Westinghouse how many nuclear sites they can build in the next 5 years…
Tue, 03/08/2022 – 11:45
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Author: Tyler Durden